INDI 25 INDEX – WARNING SIGNS
Trend: Short term down. Medium term technically up. Long term up.
Strategy: Sell short the bounces. The Indi 25 index made a new all-time high in early August. It’s formed a large broadening formation (lines 1 and 2), which I believe is a topping pattern (rather than a continuation pattern). The weekly RSI (on top) is giving two negative divergences, one of which is particularly large. Both are warning of a large correction to come. Traders sell short large-cap industrial stocks/or SatrixInd on a bounce back to 23 100 on this index. (At the time of writing the index was at 22 650.) Investors reduce long-term holdings. Look for a drop to its 50-week moving average (21 550) initially, but thereafter to line 1 support (20 480). If line 1 gets broken (very likely), it will set up a minimum downside target of 17 880 ie the height of pattern 1-2 projected down. Keep your stop-loss for shorting as a weekly closing price above line 2 (23 650).