The movement of nifty during the week is nothing but spectacular. It opened with a gap that too with ceiling and also went on to hit a second ceiling. Till now we are experienced on down ward ceiling and this is a quite new to us. Nifty closed during the week with a gain of nearly 15%.On point may be noted that till indices or stocks are raising/falling steadily there is no problem with the rise but when they raise/fall vertically the real problem arises as the generally after such a vertical raise the entire raise/fall is recovered of major portion of it is recovered. And another point to be noted is that the high or low of such a vertical raise/fall is difficult to break. You might have noticed on black Monday i.e. in May 2004 when new government was formed the market formed a new low which till now has not been broken and also the vertical fall of January has ensured that the low of vertical fall was not taken out till 5 months and also the fall of October 2008 the low made during that period is not broken till date even though 7 months have gone by. If going by the history technically it appears that the high made on Monday will not be taken out easily as it will offer formidable resistance to any further up movement. Generally such vertical raise/fall is associated with extreme optimism/pessimism that is the reason those levels are difficult to be taken out as such optimism/pessimism is difficult to exceed.So now history is to be believed we have made a top at-least for three to five months period. And also the indices are far above the moving averages which is giving an indication that indices might move towards the moving averages or MA will move towards the price. But going by the history price moves towards MA giving an indication that price will move towards MA indicating that we might see a down ward movement in the indices at-least for next one to two weeks. So be care full with longs.It may also be noted that indices have been raising continually for the last 11 weeks and we are two weeks away from the magical 13 but as I have indicated there so many cases when correction has set in after 11 so we have to see what the market indicates..
Elliotte wave Analysis
It can be seen from the above chart that the indices are in a trading channel and till the channel is not violated on the down side there is not problem for the uptrend. As the channel is still intact the uptrend is still maintaining. It may be noted that the A wave from 2539 to 3497 a raise of 958 points and the “B” a flat was a raise of 37 points ( it was a running correction) and the “C” generally will imitate “A” wave in value or time wise and also Fibonacci relation ship of the same. The “C” wave of from 3534 to 4509 a raise of 975 points which is nearly equal to wave-A. so it is giving an indication that the wave ”C” might have completed and we might see a correction at-least for short period of time which will bring the indices to the support levels which is around 3800 levels. So as far as technicals are considered we might see a correction in coming weeks.
Larger picture of nifty:
It may be noted that nifty has corrected from 6357 to 2539( where the wave ended even though the low was 2222) a fall of 3818 points and the raise has moved above the 50% level and moved below that 50% level is at 4448 it just moved above it and is below it so it will offer a formidable resistance now. The 61.8% level is at 4898 which will be very very difficult to break and market might take time to break above it. Any break of the same has chances of seeing nifty a new high. If the correction on larger picture is not over and we are forming a zig-zag we might see market moving up above the 61.8% level in time to come. It may go near it and correct towards 3000 levels. This now not body will believe now but if correction is not over (which according to me is not over now) we have all the chances of seeing nifty near 3000.
Directional Momentum index
As indicated in my last weeks update bulls have taken firm grip on the market. DMI has moved from 38 to 46 levels indicating that bulls are still in control of the market. As the DMI is above 40 we can see a huge volatility in the market with upward bias in the market.
M.Sri Mahidar
Sunday 24th May 2009 8.30 PM IST
Trend is friend
No comments:
Post a Comment