I am updating this thread after nearly two weeks. One important thing that has happened during the last two weeks is it appears that nifty has broken out of the triangle and moving further down wards. One point to be noted is that nifty has just moved below the triangle moved down and now currently closed exactly at the break-out trend line. Generally when triangle break happens prices move in the direction of break-out and then move towards the trend line just touch the trend line and then fall viciously in the direction of the break out. In the present case break out is down ward and now it is placed exactly at the trend line if nifty fall from the current levels and with volumes then we have all chances of nifty moving below the 2500. Another thing to be noted is that nifty is placed exactly at 20 day EMA which is at 2710 so in the coming week especially on Monday and Tuesday this level (2710) becomes crucial as nifty any move below this will give upper hand for bears and any move above it will strengthen the hands of bears. So keep a very very close watch at 2710 for nifty spot to make any trading call.
Elliott Wave Analysis:
As has been indicated it appears from the chart that triangle might have completed and down ward break out has happened and now it is exactly at the trend line generally market reverses at the trend line and also on just moving above it. So in the current week we might see the nifty moving down. Any movement of nifty above 2800 will have to favor bulls. Now it appears that you might have doubt as to what is the minimum level of the nifty if the triangle break out has happened, min retracement should be at-least the 75% longest length of the triangle, the longest length of the triangle is the wave –a which is of length of 633 points so the minimum fall after the break out of the triangle should be lf length 474 points from the end of wave-e, the minimum target should be 2494 which has still not been violated. This is giving an indication that we have all fair chances of nifty moving towards those levels so better watch out. If nifty moves below 2494 then we have chances of nifty going to 2336. Considering this it appears that the coming week is going to be a very crucial week which might give trend of the market. so better watch out.
Directional Momentum Index (DMI)
DMI has moved above 20 after nearly five months and is now placed at 25. From January 2008 onwards DMI has moved above 20 only three times, first time in January 2008 where in nifty fell by nearly 1800 points, next time it happened in June 2008 where in nifty fell by 1000 points, and third time in October 2008 where in nifty fell by nearly 2000 points. After October nifty has again gone above 20 in March 2009 So you can imagine the amount of destruction which might happen. One thing which has happened by Fridays movement is that +D is moving up and –D1 line is moving down indicating that the down ward movement has slowed down/ halted so DMI movement for next two days is going to crucial as it will clearly give an indication as to whether the direction is having strength or not. So keep a close watch on DMI especially on Monday and Tuesday.
Resistances: 2750/2800/2830/2900
Supports: 2710/2600/2555/2503/2336/2223
M.Sri Mahidar
Sunday 15-Mar-09, Time 9.00 PM IST
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