Nifty Weekly Technical Update for week ended August 8th, 2009.
Nifty opened on a strong note on Monday move up above 4700 closed for one day above it and then started to move down and the fall accelerated on last two days of the week finally close at the lowest point of the week. The Close at the lowest point of the week is indicating towards the weakness of the market. All through the movement during the last two weeks the up move was associated with higher volumes and the down move was associated with heavy volumes suggesting that at higher levels profit booking has taken place and that the market sentiment is not favor of bulls and was shifting in favor of bears. The movement during the week has confirmed that 4700 is the formidable resistance which may not be easy to be broken as nifty has failed to pierce it twice in the last two months. And also the nifty attempt twice has given an indication of a probable double top and reversal seems to have just started. If double top has indeed occurred then we have to see a very very big fall not seen in the last five months. Another point which I have been discussion for last so many weeks is the no of weeks and months of raise. For the week ended July 31st nifty has completed 21 weeks and also five months of raise. Both 21 and five are Fibonacci and the nifty has started to fall after exactly the Fibonacci months and weeks. So we cannot take the fall of the last week lightly. Another point to be noted is that the market has completed double top at exactly the completion of the time period. The time period and the patterns are pointing towards probable reversal in the markets. It appears that reversal has happened quietly and when majority were talking about probable end of the bear market and nifty touching 5200 levels or so.
Nifty has on Friday moved below the 15 day EMA indicating that for the short term the market has turned weak and now the strategy should be short the market on every raise but remember one thing if and if market move above 4536 then the strategy should be reversed.
On weekly chart nifty has closed below the last weeks open indicating that weakness has set into the market and it can reverse only on very good positive development. Any break of 4400 will open gates towards last month’s low of 3900 levels. The MACD on weekly charts is about to give a sell signal if given will give an indication of weakness on weekly charts. In weekly charts also the weakness is going to set in. Nifty has exactly closed at 5 weekly EMA and any break of the same will open gates on down sides weekly trix is buy mode indicating that the market are showing still showing some strength. TRIX on weekly charts at the same levels as that of January 2008 and has just started to move down by not give a sell signal. The downward movement is indicating that we might has see top but still not confirmed by TRIX.
It can be seen from the chart below that there is a huge divergence in the both MACD and RSI. In case of RSI there is divergence both on daily and weekly charts indicating that all is not well with the market. This is giving an indicating that although indices are moving up they lack momentum. Such divergences have earlier occurred in Dec 2007 and January 2008 and you know what happened after that markets tanked heavily. So be cautious will every raise, as every raise gives an opportunity to either short or book profit.
Nifty opened on a strong note on Monday move up above 4700 closed for one day above it and then started to move down and the fall accelerated on last two days of the week finally close at the lowest point of the week. The Close at the lowest point of the week is indicating towards the weakness of the market. All through the movement during the last two weeks the up move was associated with higher volumes and the down move was associated with heavy volumes suggesting that at higher levels profit booking has taken place and that the market sentiment is not favor of bulls and was shifting in favor of bears. The movement during the week has confirmed that 4700 is the formidable resistance which may not be easy to be broken as nifty has failed to pierce it twice in the last two months. And also the nifty attempt twice has given an indication of a probable double top and reversal seems to have just started. If double top has indeed occurred then we have to see a very very big fall not seen in the last five months. Another point which I have been discussion for last so many weeks is the no of weeks and months of raise. For the week ended July 31st nifty has completed 21 weeks and also five months of raise. Both 21 and five are Fibonacci and the nifty has started to fall after exactly the Fibonacci months and weeks. So we cannot take the fall of the last week lightly. Another point to be noted is that the market has completed double top at exactly the completion of the time period. The time period and the patterns are pointing towards probable reversal in the markets. It appears that reversal has happened quietly and when majority were talking about probable end of the bear market and nifty touching 5200 levels or so.
Nifty has on Friday moved below the 15 day EMA indicating that for the short term the market has turned weak and now the strategy should be short the market on every raise but remember one thing if and if market move above 4536 then the strategy should be reversed.
On weekly chart nifty has closed below the last weeks open indicating that weakness has set into the market and it can reverse only on very good positive development. Any break of 4400 will open gates towards last month’s low of 3900 levels. The MACD on weekly charts is about to give a sell signal if given will give an indication of weakness on weekly charts. In weekly charts also the weakness is going to set in. Nifty has exactly closed at 5 weekly EMA and any break of the same will open gates on down sides weekly trix is buy mode indicating that the market are showing still showing some strength. TRIX on weekly charts at the same levels as that of January 2008 and has just started to move down by not give a sell signal. The downward movement is indicating that we might has see top but still not confirmed by TRIX.
It can be seen from the chart below that there is a huge divergence in the both MACD and RSI. In case of RSI there is divergence both on daily and weekly charts indicating that all is not well with the market. This is giving an indicating that although indices are moving up they lack momentum. Such divergences have earlier occurred in Dec 2007 and January 2008 and you know what happened after that markets tanked heavily. So be cautious will every raise, as every raise gives an opportunity to either short or book profit.
Directional Momentum Index:
DMI is at 17.10 and has just given a sell signal i.e –D has moved above the +D. Wait for the DMI to move above 20 to give an trending indication. So keep a close watch on DMI as it is expected to give a clear indication of direction in coming weeks.
Pivot Point Trading Strategy
As nifty is below the weekly pivot indicating weekness. As long as nifty stays below the weekly pivot we have chances of seeing 4386. One point to be noted is that nifty has struggled to move near the yearly pivot of 4856 indicating weakness and we might see further down sides. In the coming week the range appears to be 4290-4558.M.Sri Mahidar
Sunday 9th August 2009 Time 8:20:45 PM IST.
Trend is friend.
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