As predicted in the earlier post "Nifty set to open weaker on 12th August - Ichimoku analysis", the benchmark Nifty index opened weaker at open, traded in a narrow range between 5372.45 and 5431.10 and finally ended at 5416.45, well below the Tenkan Sen of 5420.75 of yesterday.
The Kinjun Sen at the end of yesterday was at 5362.8, and this might have acted as a support for the index protecting further downslide for the day.
Thus, the Ichimoku analysis can be considered a reliable tool for technical analysis that gives the broad picture of the underlying index at a single glance.
In my earlier post, I had laid more emphasis on Nifty and its movements for the day. Ironically, the BSE Sensex also gave a similar signal, with the closing price ending at 18,070.09, tad below the Tenkan Sen of 18,074.09 on 11th August 2010.
The BSE Sensex also opened predictably in the red, at 17,972.68, traded in a range between 17914.62 and 18,113.62 during the day and finally ended the session at 18,073.90, again below the Tenkan sen of 18,074.09.
Thus, it is clear from the technical analysis that the short term outlook for both the NIFTY and the SENSEX remains bearish, and any decisive break above the Tenkan Sen is a prerequisite for change of direction in the prices.
Let us try to study how the events unfold over the next few days.
The Kumo Cloud, or the area between the two spans, lies well below for both NIFTY and the SENSEX, and as such, the medium term outlook for the indices seems to be bullish as the closing prices are well above the Kumo Cloud, suggesting the downside is limited. Investors would be advised not to take any long positions in the present circumstances and wait for opportunities/
