Nifty Weekly Update for week ended 24th January 2009.
Nifty movement during the entire week has been exactly as indicated my last weeks update. Nifty has opened on slightly higher than the previous weeks open and there after continuously fell for last four days. Nifty movement during the week is pointing towards inherent weakness in the market participants. Nifty during the week has broken below the very strong support level at 2800 and subsequently 2700 also indicating the weakness has set in the market and we have all the chances of nifty moving further down sides. Nifty has made five week low on Friday and nearly closed at the lowest point of the week indicating that there is good amount of weakness in the market. The movement during the week is indicating that we might head towards the December lows of 2570 and 2503 and if 2503 is broken then there is only one support at the October 2008 low of 2203. Nifty has fallen continuously for four days indicating that we might see indices falling for at-least another day to complete Fibonacci of five days. Another point to be noted is that nifty has been falling for the last three weeks and the fall has erased the five weeks raise indicating that the fall is faster than the raise and once again indicating that we are still in the bear market. Till this phenomenon is reversed we will be making new lows. Nifty during the current weeks has given a significant direction to the market which appears to be down. Till its recent high of 2869 is taken out we have all chances of nifty moving further down sides towards October lows. So you know where to keep stop loss if any shorting has been done. Another point to be noted is that the fall all through the last two week has been on higher volumes indicating that bears are still holding upper hand. One point which I have been discussing for last few weeks is the 20 Day EMA nifty is still below the 20 Day EMA and falling, 20 D EMA is at 2840 so any shorts have to be closed once nifty moves above 20 Day EMA. The coming week is a truncated week and also derivatives settlement week which generally associated with huge amount of volatility in the market and we should be careful in making any trades so while putting stop loss we should take into account volatility into account.
Nifty movement during the entire week has been exactly as indicated my last weeks update. Nifty has opened on slightly higher than the previous weeks open and there after continuously fell for last four days. Nifty movement during the week is pointing towards inherent weakness in the market participants. Nifty during the week has broken below the very strong support level at 2800 and subsequently 2700 also indicating the weakness has set in the market and we have all the chances of nifty moving further down sides. Nifty has made five week low on Friday and nearly closed at the lowest point of the week indicating that there is good amount of weakness in the market. The movement during the week is indicating that we might head towards the December lows of 2570 and 2503 and if 2503 is broken then there is only one support at the October 2008 low of 2203. Nifty has fallen continuously for four days indicating that we might see indices falling for at-least another day to complete Fibonacci of five days. Another point to be noted is that nifty has been falling for the last three weeks and the fall has erased the five weeks raise indicating that the fall is faster than the raise and once again indicating that we are still in the bear market. Till this phenomenon is reversed we will be making new lows. Nifty during the current weeks has given a significant direction to the market which appears to be down. Till its recent high of 2869 is taken out we have all chances of nifty moving further down sides towards October lows. So you know where to keep stop loss if any shorting has been done. Another point to be noted is that the fall all through the last two week has been on higher volumes indicating that bears are still holding upper hand. One point which I have been discussing for last few weeks is the 20 Day EMA nifty is still below the 20 Day EMA and falling, 20 D EMA is at 2840 so any shorts have to be closed once nifty moves above 20 Day EMA. The coming week is a truncated week and also derivatives settlement week which generally associated with huge amount of volatility in the market and we should be careful in making any trades so while putting stop loss we should take into account volatility into account.
Elliott Wave Analysis:
Last few weeks I have been discussion two scenarios one is triangle and also flat. And as per EW it appears that the triangle pattern does not hold good which I have indicated last week and we will now discuss Flat Pattern only.
Last few weeks I have been discussion two scenarios one is triangle and also flat. And as per EW it appears that the triangle pattern does not hold good which I have indicated last week and we will now discuss Flat Pattern only.
As it can be seen from the first chart we have completed an irregular flat at 3147 and we have started the fifth wave and general phen
omenon is that the fifth wave should go below the low of the third wave which is at 2223 which is still some four hundred points away. But there are can be a cases of fifth wave failure where in the fifth wave does not go below the low of the third wave. Generally fifth wave failure occurs when the third wave is very much longer that the first wave 
and in the current case it appears that the 3rd wave is more that 2.618 times the first wave, giving an indication that we might see a fifth wave failure in the current case. If there is a fifth wave failure then we might see the fifth wave not breaking below the 2223 level and it will make a low any where between 2400-2223 level. Fifth wave failure is not a necessicity when 3rd wave is elongated but most of the times it happens so this has been discussed currently so as to make you updated on this aspect also so that you are not caught unwares.
The break up of the fifth wave is given in the second chart and it appears that we have completed the first two waves and we have just started the 3rd wave after which fourth and fifth wave will occur. Generally the 3rd wave is the most violent of all the waves giving an indication that we might see markets moving very fast as we appear to be in the third wave. So be prepared for the ride.
Direction Momentum index (DMI):
DMI which determines the strength of trend be it an uptrend or the down trend is one of my favorites. This time when the markets were falling for the last three weeks DMI started to raise from the lower levels of 13 to currently at 19.93. Any move of it above 20 will confirm the trend which is down currently and the pace of the down move will increase a DMI inches upwards. As the peculiar feature of DMI is that once it moves above 20 we might see sudden reversal and suddenly it follows the primary trend. Considering this we might see a sharp but short move up in the current week in may be one or two days and then we may say nifty tanking to October lows. So keep a close watch on DMI
Resistances: 2750/2800/2869/2950/3000
Supports: 2570/2503/2223
omenon is that the fifth wave should go below the low of the third wave which is at 2223 which is still some four hundred points away. But there are can be a cases of fifth wave failure where in the fifth wave does not go below the low of the third wave. Generally fifth wave failure occurs when the third wave is very much longer that the first wave 
and in the current case it appears that the 3rd wave is more that 2.618 times the first wave, giving an indication that we might see a fifth wave failure in the current case. If there is a fifth wave failure then we might see the fifth wave not breaking below the 2223 level and it will make a low any where between 2400-2223 level. Fifth wave failure is not a necessicity when 3rd wave is elongated but most of the times it happens so this has been discussed currently so as to make you updated on this aspect also so that you are not caught unwares.The break up of the fifth wave is given in the second chart and it appears that we have completed the first two waves and we have just started the 3rd wave after which fourth and fifth wave will occur. Generally the 3rd wave is the most violent of all the waves giving an indication that we might see markets moving very fast as we appear to be in the third wave. So be prepared for the ride.
Direction Momentum index (DMI):
DMI which determines the strength of trend be it an uptrend or the down trend is one of my favorites. This time when the markets were falling for the last three weeks DMI started to raise from the lower levels of 13 to currently at 19.93. Any move of it above 20 will confirm the trend which is down currently and the pace of the down move will increase a DMI inches upwards. As the peculiar feature of DMI is that once it moves above 20 we might see sudden reversal and suddenly it follows the primary trend. Considering this we might see a sharp but short move up in the current week in may be one or two days and then we may say nifty tanking to October lows. So keep a close watch on DMI
Resistances: 2750/2800/2869/2950/3000
Supports: 2570/2503/2223
Turtle Trading- Four Week Phenominon
Last week has indicated that as per Turtle Trade Go Short if it goes below 2700 as this week it has gone below 2700 if any body has gone short on nifty here are probable square off levels
Stop Loss: if Nifty Moves above 2869
ATR is at 105 so the double ATR is 210 so Further shourt positions should be added only once nift moves below 2500 with a stop loss at 2600.
M.SRI Mahidar
26th January 2009 Time 8.00 PM IST
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