Nifty Weekly Update for week ended 21st March 2009.
Nifty surprised every body and has moved up nearly 100 points from the last weeks close. On last two days of the week the market has formed two bearish patterns as per the candle and stick patterns the “doji” which clearly indicates that there is good amount of indecisiveness in the market. Unless the high of “doji” 2816 is taken out the reversal of the same still holds good. It is better for us to wait up to the high of 2836 is broke before initiating any longs. One of the positive things which has to be noted is that last week the nifty has successfully broken above the 10 day EMI next moved above 20 day EMI and now placed exactly 50 day EMA. During the last five months nifty has reversed when ever it touched or just moved above the 50 Day EMA. The correction has generally around 300 points. So considering the same it appears that we might be at a crucial level of directional movement on either direction with –ve bias. If 50 day EMA is successfully broken then nifty will make an attempt at 100 Day EMA which is placed around 3000. Currently any move of nifty below the 20 day EMA at 2750 will be good news to the bears years and nifty might move towards 2700 in that case. So be cautious and trade wisely.
Another point to be noted is that nifty is still making a lower high which is still indicating that we are still in the bear market. One positive feature is that we are making higher bottoms giving an indications that bears are not as strong as they appears to be. 2524 is violated then we have all fair chances of making a lower low. Another point which would indicate the trend reversal is that the rise should be faster than the fall and to day it has not been violated i.e the recovery was slower/took more time than the fall. In the current case the last fall from 2969 to 2539 took 15 trading days and the current rise from the low has completed 8 trading days so nifty has to move above 2969 in next 4-5 trading days to indicate the trend reversal. If this does not happen then we have all the fair chances of nifty touching at least 2500 in the coming month.
Nifty surprised every body and has moved up nearly 100 points from the last weeks close. On last two days of the week the market has formed two bearish patterns as per the candle and stick patterns the “doji” which clearly indicates that there is good amount of indecisiveness in the market. Unless the high of “doji” 2816 is taken out the reversal of the same still holds good. It is better for us to wait up to the high of 2836 is broke before initiating any longs. One of the positive things which has to be noted is that last week the nifty has successfully broken above the 10 day EMI next moved above 20 day EMI and now placed exactly 50 day EMA. During the last five months nifty has reversed when ever it touched or just moved above the 50 Day EMA. The correction has generally around 300 points. So considering the same it appears that we might be at a crucial level of directional movement on either direction with –ve bias. If 50 day EMA is successfully broken then nifty will make an attempt at 100 Day EMA which is placed around 3000. Currently any move of nifty below the 20 day EMA at 2750 will be good news to the bears years and nifty might move towards 2700 in that case. So be cautious and trade wisely.
Another point to be noted is that nifty is still making a lower high which is still indicating that we are still in the bear market. One positive feature is that we are making higher bottoms giving an indications that bears are not as strong as they appears to be. 2524 is violated then we have all fair chances of making a lower low. Another point which would indicate the trend reversal is that the rise should be faster than the fall and to day it has not been violated i.e the recovery was slower/took more time than the fall. In the current case the last fall from 2969 to 2539 took 15 trading days and the current rise from the low has completed 8 trading days so nifty has to move above 2969 in next 4-5 trading days to indicate the trend reversal. If this does not happen then we have all the fair chances of nifty touching at least 2500 in the coming month.
Elliotte wave Analysis:With regard to elliotte wave analysis there appears to be not much chance in the analysis. During the my previous weeks update I have indicated that we have broken a triangle and also that after breaking the triangle the indices generally move down then move up to the base of the triangle and then make a free fall or rise in the direction of the break. In the current case the breakout out of the triangle in on the down side and nifty has broke below the triangle trend line and moved down towards 2500 and is not exactly placed at the base trend line (b-d line) is indicated in the below chart.
The minimum target from the break out of a triangle in the current case come to 2494 which has still not been violated. This gives an indication that we still have one more down side leg left in the current case. So be prepared for the same. Any move above/close above the 3000 level will negate the implications of the triangle.Directional Momentum index
In the current week +D has moved above the –D1 line indicating that bulls are taking center stage but DMI is moving down and is currently place at 19.69 indicating the bulls are loosing ground. In the current case even the +D1 line is also moving down indicating the bulls are becoming weak so current week appears to be a crucial week which has all chances of given a clear direction to the market.
Nifty Swing Trade:
As per two day swing trade currently it is in buy mode and the trend will reverse on move below the 2757 level (future). As per swing trade any move below 2757 will pave way for 2697 and any breach of the same has all chances of nifty moving towards the 2525. The points being discussed in the swing trade are that of the future.
Resistances: 2800/2830/2850/2900/2969/3000
Supports: 2757/2710/2600/2555/2503/2336/2223
M.Sri Mahidar
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