Can we bounce from here?

A difficult question at this point of time given that the global outlook is looking gloomy and the larger trend in the market is definitely southwards....Also the way Dollar index is rising and commodities are crashing is not a healthy sign for the markets. Huge outflow of FII money coupled with a bad FPO response in one of the prized companies of the government of India, NTPC at this point of time definitely turned down the sentiments....

Lets look at the following chart...

Right now, I wont go into much complications. Just observe the above chart and refer to my "Mirror Image" pattern explained in earlier posts. Somehow, I still find it to hold true.

I have encircled 2 points on the charts. The right point is the image point of the left one. Now, as per my analysis, if we hold on to the current levels above 4700, we might possibly move towards 5400-5500 zone from here on.

After that another crash and then the final rally; all of which I would explain in subsequent articles. Currently the market participants has discounted the level of 4640-4650 as support being that of 200 dma. I, personally, feel that market wont oblige everyone by allowing them to buy at their desired level. At least one important level ie, the 34 ema on weekly charts has been achieved for the first time since the rally began in March 2009. Also the bearish wave has been completed at around 4760. Even the daily stochastics is in process of making the 'W' pattern.

So I would suggest all to start buying at least in small quantities around these levels. If one remembers, I had mentioned of increase in volatility in coming months way back in Nov. And now we can see the effect. First the intraday volatility increased and now VIX has moved from 19 to 30. This is just the beginning and VIX might even move to 50-60 range in coming days and weeks.....

Happy trading and Investing.....