Movement of nifty for the current week has left all of the markets in a fix. Nifty is see-saing daily i.e one day up and another day down all through the week the movement was the same. One day it gives a down ward break out and on the next day the entire fall is erased indicating that there is a tug-of-war between bull and bears and who ever wins the market will move a big way in that direction. Nifty during the whole week has lost 45 points from its previous weeks close. This week is the second successive week of loss for nifty.
All through the week nifty has been moving in a range of 2700-2850-2900 any break of these lines will result in a big movement in that direction. One negative feature which has to be observed is that when ever nifty fall the volumes are heavy and nifty raises on less volumes indicating that still bears are in control of the market. Till 3250 is voilated bears will be in upper hand once it is broken bulls will gain upper hand. The movemnt of nifty during the week has clearly indicated the indecisiveness of the market participants.
It has been indicated that nifty has formed a extremely bearish "Dark Cloud Cover" pattern as per candle and stick parlace. I have also indicated that this pattern does not require confirmation. Till the high of 3147 is voilated the implications of this pattern stay good. But generally there is a tendency of the markets to just go near the low of the pattern and reverse from there in a big way. The movement during the week has just confirmed that and in the comming weeks we might see the indices confirming the implications of the pattern. Again I say that till the high is voilated we might see nifty drifting towards October 08 lows.
The movement of nifty during the week has given a good support and resistance levels. The support and resistances indicated by nifty are support at 2700 and resistance at 2850-2900 so any break of these levels we should eight initiate long or short positions.
This week also nifty has stayed below the 20 day EMA which is at 2900 till nifty is below this short positions can be held and once it moves above it short positins should be closed and long positions can be taken with stop loss at 20 day EMA.
Elliotte wave analysis:
Option-I Triangle
Last week i have indicated that if nifty does not make an attempt to move towards 2978 the minimum retracement level for wave-e. It can be assumed that the pattern formed is not a triangle and we might have formed flat. So i will not discuss the same as the chances of triangle are remote in the current scenerio.
Option - II- Flat
As per this pattern it appears that we might have compleated a wave-C of the flat which is the final wave of the flat it implies that might see nifty drifting down wards towards 2500 level. Any break below 2700 has all chances of nifty moving towards 2500 and if that is broken then we have all the chances of nifty moving towards oct 08 level of 2200. So wait and see what will unflod in the comming week.
Support and resistance:
Support:2800/2700/2500/2200
Resistances:2850/2950/3100/3240
Turtle Trading: 4 week phenominon
Go long if nifty closes above:3147
Go short if nifty moves below:2700
DMA: The movement of DMA for nifty will indicate the strength of the trend be it bull strength or the bear strength. Current -D1 line is above +D1 line and DMI has moved from 13 to 17 in the current week indicating that bears are still in upper hand and are gaining strength. IF DMA moves above 20 it will confirm the bear strength and nifty will drift further.
So You know how to trade.
M.Sri Mahidar.
January 18th 2009 Time: 6.36 PM IST
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