The chart 1 is a daily chart and looking at the MACD , one can see that during the falls in january the MACD went to -220 NS @ 4448 , in july -204 NS at 3790, and now at -114 NS at app.3800 level . The MACD is improving gaining strenght with the passage of time despite NS going lower, that shows a POSITIVE DIVERGENCE..as of today..also pls. note that the red line in macd( above zero line) is a strong resistance point from where it keeps falling.. this is showing signs of bottoming out some time in the near future.The chart 2 is the weekly charts which show the green line at a area which can be a tentative support in coming days if we trail downwards..its around 3600 area and is march '07 lows..(Sensex which made a low 12312 in march' 07 has already gone lower at 12153 now)Also note that this MACD also is loosing the momentun, the 2 first falls from 6357 & 5500 is strong where as now its showing compression of trend.
So can we fall more , sure we can, but will this have huge momentum, cant say as MACD is showing divergence and compression..so maybe cross your fingers we may be near to an end of this trend soon. The short/long lines as yet are pointing down and these points could be the reversal targets if & when we turn to start with..So dont be depressed with all the bad news around. MARKETS HAVE TO MAKE ITS WAVES..UP-DOWN-UP.Wait for the MACD to cross over for upwards move..then enter for a nice haul up.
MACD is a powerful tool used by many experts to see the trends as they start giving signals much in advance of the coming moves of the markets..hope this helps all...cheers..
