Nifty opened on a strong note moved up on Monday and on the next two days it corrected but not below the opening of the week and on the last two days of the week it moved up and closed at nearly highest point of the week. Nifty has been raising continually for the last 20 months and by the coming week we will be completing 21 weeks and 21 happens to be a Fibonacci and we have fair chances of correcting eight at the end of the week or from the week following the current week. So it may be kept in mind while trading or investing that we are completing 21 weeks and we have all the fair chances of correcting. It may also be noted that nifty is also completing 5 months of raise and as you know that 5 is also a Fibonacci so we are coming to the end of 21 weeks and also 5 months and as both are Fibonacci we should be very watchful about the turns in the market as the markets turn when ever the Fibonacci period nears or completes. I don’t know why but it happens I have been seeing this for the last five years invariably the markets turns at these time periods. It may also be noted that market should not necessarily correct at this Fibonacci combination but there are very fair chances if it does not correct at this Fibonacci then we might see market moving up till the next Fibonacci i.e. 8 months and 34 weeks. So better watch out as in ten days we are going to know what is going to happen to the market.
Nifty is above the 15 day EMA which is at 4355 currently, so till above that it is better we go long on every fall if it is taken over then the strategy is reversed.
One point to be particularly noted that nifty is finding it difficult to break and close above the 4600 barrier for the last nine weeks and it appears that it may not in is not in a hurry to break above it. Any close of nifty above 4600 has all chances of opening up significant upsides. If nifty closes above 4600 then we can safely go long with stop loss at 4600 decisively.
Elliotte wave analysis: 
With regard to time frames it has been clearly indicated above in the introduction section. And with regard to formation of flat I have clearly indicated in my last weeks update that nifty will surely go past 3400 and if 3400 is taken out then we have all fair chances of moving towards 4541 and if 4541 is taken out 4695 is achievable. And it has exactly happened the same. We are in just completing the “b” wave of the “B” wave and we are in just forming the “c” wave of “B” wave and after completing of the “B” wave the market has all fair chances of unfolding the wave “C” which has all the fair chances of moving towards sub 4000 levels. And if 4695 is taken out then there will be higher targets which will be discussed only when it is broken. Generally in a flat the wave “C” will be very violent and we have chances of having significant cut in the market. If there wave “C” failure i.e if wave “C” fails to go below the 61.8% level of wave ‘B” then it opens significant upsides for the market. so in the coming two to three weeks we might get a good indication of the direction of the market. but currently the bias is down wards.
Directional Momentum Index:
DMI has moved from around 18.54 levels to current 18.90 indicating that even though the market is moving up it is not trending and lacks strength indicated by downward movement of DMI. +D1 is at 30 and –D1 is at 20 indicating that bulls are having upper hand and indicating lack of strength as DMI is below 20 and is moving down. It can be seen that market has moved up from around 3918 to nearly 4600 so a raise of 700 points but the DMI has moved down from 21.50 to around 18.9 levels. It is just flat indicating that the current up move lacks strength and might not sustain. Another point is that there is a clear divergence between nifty and DMI, which is not a good news for the bulls. So till DMI is not trending it’s difficult to sustain at higher levels.
Turtle Trading - 20 day Phenomenon
Current trend – 4480 (Generated at 4480 on Monday)
Go long above - NA
Square off - 3919.
ATR at 134
How ATR is to be used? – if you have take a long positions you have to add another position at 2 ATR with a stop loss at the 2ATR – ATR for all the open positions/ acquisitions.
My advice in current situation is that square off when ever it fall below the 15 day EMA which is at 4355.
Pivot Point Trading Strategy:
Last week I have indicated that if 4376 is taken out we have chances of taking out 4537 and it has exactly happened like that. And for the current week it appears that weekly pivot is placed at 4508 and if it is taken out on down side then we have chances of moving towards 4437 and then towards 4307. and on upper side we have chances of seeing 4638. Considering this the range for the next week is between 4638 and 4307.
M.Sri Mahidar
Sunday 26th July 2009 Time 8:11:41 PM IST.
Trend is friend.
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