We confirmed that both the Short Term and the Intermediate Term trend is up and along with the pattern formation the potential for further upside still exists.
Historically, the month of October is one of the strongest performing months and often sees gains of +4% adding to the weight of evidence for bullish plays.
Although technical indicators have been waning for the last few weeks, price is the most important indicator and should not be ignored. Many traders who have waited for buying opportunities may find that the volatility breaks have provided good risk to reward trades. As noted previously, volatility tends to increase from September through to October, and this has certainly panned out again this year.
At present we should observe a time window of 3-8th October for a possible reversal of a Fibonacci time resistance area and also 14052 – 60 as a key price level.
We should also note that the current pattern formation appears to be making a five wave setup where upon completion of wave 3, a fourth wave pullback could set the stage for another thrust higher. If we see an immediate reversal and trade below 14052, it would suggest that wave three has been completed.
Support areas to hold the index up would be 13697 - 13643 initially and followed by 13481 13439.
Upside targets now come in at 14448 – 14538 as long as the 13360 area is not violated.
Sandy Jadeja is Chief Market Strategist for ODL Markets and founder of www.Spreadbettingtowin.com where he teaches low risk trading strategies and money management.