Sensex trends

Sensex 11,801.70

As predicted, Sensex has started its intermediate downtrend. Fundamentalists are attributing it to a huge FII sell off. Well, that is true and is happening! Where is it going to stop? No one has a clear cut answer.

Based on chart trend, I have spotted the following. I am giving rough figures here and may not be accurately match the actual Sensex numbers.

1. Sensex topped at 20873 during Jan 2008 before starting its downtrend. It made an intermediate bottom at 14809. This translates to a 29% fall. It then had an intermediate rise to 17600 translating to an 18% retracement.
2. It started its downtrend to 12576 from 17600. This translates to a 28.5% fall (roughly 29%). After the bottom, it made an intermediate top again at 15504 translating to a 23.2% rise.
3. The third leg of fall expectedly would fall in the same range as the previous fall. Hence, I expect the next support at 10850-11200 levels.

At this point, traders are advised to buy and wait for an intermediate uptrend. The fall would be sooner than the rise -  I expect Sensex to touch the quoted support level within a few weeks(and not days).