Nifty has surprised every body during the week and went on to make a 11% gain during the week to close at 3108 after making a high of 3123. One noticing feature of the rise is that the rise is on very high volumes signifying that the rise may be genuine. I have mentioned during the last week that if nifty moves past 2969 during the week then it indicates that the recovery was faster that that of the fall. The fall from 2969 to 2525 took 15 days and the rise above 2969 from 2525 took only 10 days signifying that bulls are gaining upper hand. The faster retracement is giving an indication that some important Elliotte wave might have completed at 2525.Another noticing feature is that nifty have moved comfortably above 3000 and now it has placed at 3108 just below the January 09 high of 3149. Another feature is that may be noted is that nifty has made a highest closing after 17th of October 2008, so nifty has made a highest closing after nearly 5 months( remember 5 is a Fibonacci). Another noticing feature is that nifty has comfortably moved above 50 day and 100 day EMA and is now also placed above the 100 day EMA which is at 3000. The ease at which it has broken the 100 Day EMA is giving an indication that we might be in for a surprise for bulls. 100 Day EMA has been a formidable resistance for the last 15 months and this time it has been violated at just one go. Considering this, we can comfortably say that 100 day EMA now becomes a good support level any violation of the same i.e3000 currently will not be a good sign for bulls. In the month of October also it has been violated briefly and then when it moved below the 100 day EMA all the hell broke loose and nifty fell by nearly 2000 points. This time the situation is different but if 100 day EMA is violated on down side nothing can be ruled out. It appears that nifty is heading towards the 200 day EMA which is placed at 3400 it appears that nifty is going to find a formidable resistance at 200 day EMA.
It can be seen from the above is that nifty is moving in a channel and now is placed at top end of the channel and appears that it has possible chances of correcting towards the support line which is placed at 3000.
It can be seen from the above chart that nifty has been finding it difficult to move above the sloping trend line drawn from to of 6357 and this time also it is just nearing the same which is placed at 3200-3225 level any failure of the same has all chances of taking nifty towards the support line which is placed at around 2500-2550. So in the coming month 3140 and 3200 appears to be formidable resistances for nifty.
Also in shorter term nifty appears to be in extremely over bought zone and it appears that it will be difficult for nifty to go past 3200 in this rise, it might correct from these levels towards 2900 or so and then it might make an attempt at 3200 level.
Elliotte wave analysis:
Last week I have mentioned that any move of nifty above 3000 will negate the implication of a triangle. As nifty has successfully conquered 3000 the implications of triangle pattern are ruled out and the pattern is not clear at this point of time. Either it is a fifth wave failure which I have indicated as the third wave appears to be elongated or the pattern is yet to complete as it might be forming double flat we have to wait and see I will be furnishing the same once I get the clear indication by the movement of nifty.
Directional Momentum index
Last week I have indicated that +D has moved above the –D1 line indicating that bulls are taking center stage, and the same seems to have happened DMI has moved from 19.67 to around 28 levels indicating that bulls have gained firm upper hand.
Nifty Swing Trade:
As per two day swing trade currently it is in buy mode and the trend will reverse on move below the 3008 level (future). As per swing trade any move below 3008 will pave way for 2845 and any breach of the same has all chances of nifty moving towards the 2697. The points being discussed in the swing trade are that of the future.
Current trend - Buy
Reversal Value - 3008.
Bankex
Current Price - 4402(future)
Current Trend - Buy
Reversal Value – 4165 any breach of the same has chances of taking nifty towards 3700 levels.
BEML – Rs.400
It appears that BEML is about to give a buy signal on movement above 400 once it moves above 400 it will make a 19 week high. The volumes are suggesting that some amount of buying is going into the stock and we might see a good up side movement in the stock once it is past 400 level. Technically there are no resistance levels for the stock except at Rs.800. So once it Rs.400 is taken out we have chances of the stock advancing towards 800 in quick time. But in that case 400 should be straight stop loss.
Resistances: 3141/3200/3250
Supports: 3000/2850/2757/2525
M.Sri Mahidar
Sunday 29th-Mar-09, Time 7.00 PM IST
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