Tuesday, February 7, 2012

>NCDEX: GUARSEED APPEARS TO BE TOP OUT



Above is the Daily chart of NCDEX Guar seed futures. In the last few months Guar seed futures have staged a smart rally and now the rally seems to have run out of steam. Technically speaking, a Double-Top formation is observed, which is formed between Rs 12700 and Rs 12730. This will now act as a strong resistance.


Since the DOUBLE TOP formation, prices have fallen below the Extreme Short Term rising trend line but on very high volumes, which is shown as small circle on the bottom of the Chart. This to us is an initial sign of bearishness. Another observation shows that there was a strong fractal base at Rs 11035 and the price has been consolidating within between Fractal support of Rs 11035 and Rs 12730. This formation at the top generally suggests distribution. An attempt has been made to anticipate the price movement between the consolidation zone of Rs 11035 and Rs 12730 and this is shown by the zig-zag pattern in the chart above.


Hence in our view, a breach and close below this support level of Rs 11035 would be negative and a point which would mark the beginning of Downward Rally. Our analysis suggest that a move lower could result in a test of Rs 10010, Rs 9035 and Rs 8300, sequentially.


RISH TRADER

1 comments:

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