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India Outlook

2011 was a rough year for the India equity markets, that is unless you were able to identify the bear market and trade the short side. Online Trading Academy’s Pro Picks finished the year with nearly a 40% gain in the portfolio. As traders we must be flexible with our opinions and trade what the markets are telling us, not what we want to happen.

So what are the markets telling us for 2012? Let’s have a look at the charts to see where we may be heading and what we can do about it. The Nifty is trading in a bearish channel and looks like it is getting weaker, as it is failing to touch the top of the channel. There is strong weekly demand just below current prices and we may see sideways trading or some small bounces in 2012.

bwendell 20120103 india - indiachart20120103aFigure 1

Of course the Sensex is displaying the same patterns in price. We are likely to see some bouncing and sideways movement at the weekly demand zone of 13,200 to 14,800. Should price break that level, then I would look for a bounce at the closing of the 2009 election gap. Gaps are often a magnet for price in a correction and also offer a bouncing point. Remember, the gap was caused from a lack of sellers in that zone and a great amount of buyers. Look for many of those buyers to return to profit in that area again.

bwendell 20120103 india - indiachart20120103bFigure 2

Everyone also wants to know about gold. This has been highly speculated on and is showing some signs of weakness. In the US, Comex Gold Futures have shown a double top and may break a bullish trend that started many years ago.

bwendell 20120103 india - indiachart20120103cFigure 3

In the MCX gold, the double top doesn’t look the same but there is a dominance of large red candles which suggests that the demand zone will break and gold bugs will suffer.

bwendell 20120103 india - indiachart20120103dFigure 4

Silver should suffer a similar fate as gold and has already shown more weakness. It recently broke a daily symmetrical triangle and may be headed to the measured move target of 44,000.

bwendell 20120103 india - indiachart20120103eFigure 5

As I prepare to return to India to teach more courses, I am also focused on the USD/INR chart to identify opportunities. The bullish trend for the dollar looks to continue despite the actions of the RBI.

bwendell 20120103 india - indiachart20120103fFigure 6

Looking at the dollar index itself, there is a small supply level we are hitting today, (28/12/2011), but that will only offer a small correction before we see the index move higher to test the strong supply near 83.

bwendell 20120103 india - indiachart20120103gFigure 7

So focus on selling rallies in the equity markets and riding out this bear market as it looks to continue for at least the first half of 2012. This is not necessarily bad news. If you have solid trading knowledge, then you can profit from this market. If you don’t, come visit us at Online Trading Academy and join the educated, profitable graduates who are part of our community. You won’t regret it.

– Brandon Wendell bwendell@tradingacademy.com

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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