Nifty Weekly Technical Update for week ended August 22nd, 2009.
Nifty appears to have stuck in a range bound market, this is clearly indicated by the movement of Directional Momentum Index (DMI). DMI is moving no where it just stuck between 14 to 16 indicating clearly that market is directionless. That is the reason why we are seeing on day up move and another day just reverse day. The best thing in this type of market is to stay our from trading and concentrate on the stocks which are technically sound. Market has this week on Friday again moved above the 15 day EMA indicating that bulls might have taken market into their stride and but still lack strength which is clearly indicated by the movement of DMI. Now we have to closely watch the movement of DMI when ever it starts to move up above 20 of 4 ticks in a day or two with –ve or +ve break out then we can see a big movement in the direction of the break out. In the last two years when ever DMI of nifty has come out of hibernation i.e. it has started to move up above 20 it has moved in the direction of the break out by at-least by 1000 to 1500 points. So you know what would is waiting for you a movement of at-least bare minimum 1000 points in the direction of break out. So keep a close watch on the DMI as it is going to give the strength of the market. Now from this week I would be discussion the technicals of nifty on daily charts, weekly charts and monthly charts to see the strength of the market in short term medium and long term. One point to be noted is that nifty is finding support at the 50 day EMA, during the last two weeks it has found support at 50 day EMA at-least four to five times. When ever it has gone near the 50 day EMA it heavy buying has come in which has taken the market past the 15 day EMA nifty is hovering between the 15 day and 50 Day EMA. Any breach of the 50 day EMA would be a significant event for the bears. 15 day EMA is at 4491 and 50 day is at 4375.
On daily charts nifty clearly lacks direction. All the oscillators are showing weakness, indicating that the market is in weak hands at-least for the time being. MACD and TRIX are weak but are yet to move blow the zero line to give strength to the bears. They are forming lower tops where as nifty is forming the reverse clearly indicating that market is in the weak hands but is yet to be confirmed by movement below the trigger line. RSI is still above 50 indicating strength for bulls even though its weak but it has to move below 50 to give some comfort to bears. It is hovering at around 50 to 55 for quite some time. So on daily charts nifty is clearly in the weak hands but is yet to be confirmed by the market. This gives us an option to look towards the weekly charts as to whether they are indicating any strength as of now.
On weekly charts it is giving strength to the bulls, this is the reason for the market to rise when ever it falls. As daily chart is showing weakness where as the weekly charts are showing some strength for the bulls. So we might be seeing more intense fight between the bulls and bears. MACD is in a buy mode and the average and trigger line are kissing each other and are about to give a sell signal but not given yet. TRIX is showing strength but its not been raising for the last two to three weeks indicating clearly that bulls lack strength. The distance between the average lines is narrowing indicating that it might give a sell signal we have to closely watch the TRIX on weekly charts as any sell indicated by same will result in nifty going down heavily and inversely if it starts moving up then market will also do the same. On weekly basis RSI is flat at 60 for the last five to six weeks indicating clearly that under tone for the bulls is weak or bulls are slowly loosing ground. On weekly charts there is –ve divergence in nifty indicating that bulls are clearly loosing ground. It may be noted that weekly RSI when ever it has moved above 60 and towards 70 and then can downs below 60 the markets have corrected in a big way. This has happened at-least six times from 2003 onwards. This time also nifty has moved above 60 towards 70 reached 67 and then now at 59 does this indicates some thing? One point to be noted is that on weekly charts nifty is showing diminishing volumes for the last five weeks indicating that what ever is happening is on very less volumes. But one thing which has happened during the last week is that nifty has formed a hammer indicating bulls have gained upper hand at-least for the time being. So keep a close watch on the weekly chart as of now in next two to three weeks we might get clear signal from the market on weekly charts which will be a significant event and would pave way for the bigger movement of the market in either direction. So keep a close watch as next two to three weeks will pave way for a huge profit opportunity.
On monthly charts, there is some divergences on the oscillators it self, while TRIX is showing strength for the bears, RSI and MACD has indicating strength for the bulls. MACD has given a buy signal in the month of July 2009. MACD has given a buy signal from below zero and is moving up. This is extremely bullish sign, which indicates that market might move up substantially in longer term. Previous to this MACD has given a buy signal in 2004 and was rising and in buy mode up to march 2008 where sell signal was given and subsequently to moved down below zero and now has given a buy signal below the zero line and moving up. As on monthly charts the buy or sell signals, indicate a significant change in the market sentiment in longer term. As MACD has just give buy mode and moving up, and it is only second time in last five years we can safely assume that we might be heading for good days in the markets in the months or years to come.
So now we can safely assume that on daily charts its indicating weakness, on weekly charts its indicating strength of bulls but weakening and on monthly charts it extremely bullish indicating that once the short term picture turns bullish we can see the markets moving significantly. The charts are indicating that the correction which might happen in the market in the coming week or month is going to be short lived and once the correction if it happens is over we can have fair chances of market moving significantly up to higher levels.
Directional Momentum Index:
Nifty appears to have stuck in a range bound market, this is clearly indicated by the movement of Directional Momentum Index (DMI). DMI is moving no where it just stuck between 14 to 16 indicating clearly that market is directionless. That is the reason why we are seeing on day up move and another day just reverse day. The best thing in this type of market is to stay our from trading and concentrate on the stocks which are technically sound. Market has this week on Friday again moved above the 15 day EMA indicating that bulls might have taken market into their stride and but still lack strength which is clearly indicated by the movement of DMI. Now we have to closely watch the movement of DMI when ever it starts to move up above 20 of 4 ticks in a day or two with –ve or +ve break out then we can see a big movement in the direction of the break out. In the last two years when ever DMI of nifty has come out of hibernation i.e. it has started to move up above 20 it has moved in the direction of the break out by at-least by 1000 to 1500 points. So you know what would is waiting for you a movement of at-least bare minimum 1000 points in the direction of break out. So keep a close watch on the DMI as it is going to give the strength of the market. Now from this week I would be discussion the technicals of nifty on daily charts, weekly charts and monthly charts to see the strength of the market in short term medium and long term. One point to be noted is that nifty is finding support at the 50 day EMA, during the last two weeks it has found support at 50 day EMA at-least four to five times. When ever it has gone near the 50 day EMA it heavy buying has come in which has taken the market past the 15 day EMA nifty is hovering between the 15 day and 50 Day EMA. Any breach of the 50 day EMA would be a significant event for the bears. 15 day EMA is at 4491 and 50 day is at 4375.
On daily charts nifty clearly lacks direction. All the oscillators are showing weakness, indicating that the market is in weak hands at-least for the time being. MACD and TRIX are weak but are yet to move blow the zero line to give strength to the bears. They are forming lower tops where as nifty is forming the reverse clearly indicating that market is in the weak hands but is yet to be confirmed by movement below the trigger line. RSI is still above 50 indicating strength for bulls even though its weak but it has to move below 50 to give some comfort to bears. It is hovering at around 50 to 55 for quite some time. So on daily charts nifty is clearly in the weak hands but is yet to be confirmed by the market. This gives us an option to look towards the weekly charts as to whether they are indicating any strength as of now.
On weekly charts it is giving strength to the bulls, this is the reason for the market to rise when ever it falls. As daily chart is showing weakness where as the weekly charts are showing some strength for the bulls. So we might be seeing more intense fight between the bulls and bears. MACD is in a buy mode and the average and trigger line are kissing each other and are about to give a sell signal but not given yet. TRIX is showing strength but its not been raising for the last two to three weeks indicating clearly that bulls lack strength. The distance between the average lines is narrowing indicating that it might give a sell signal we have to closely watch the TRIX on weekly charts as any sell indicated by same will result in nifty going down heavily and inversely if it starts moving up then market will also do the same. On weekly basis RSI is flat at 60 for the last five to six weeks indicating clearly that under tone for the bulls is weak or bulls are slowly loosing ground. On weekly charts there is –ve divergence in nifty indicating that bulls are clearly loosing ground. It may be noted that weekly RSI when ever it has moved above 60 and towards 70 and then can downs below 60 the markets have corrected in a big way. This has happened at-least six times from 2003 onwards. This time also nifty has moved above 60 towards 70 reached 67 and then now at 59 does this indicates some thing? One point to be noted is that on weekly charts nifty is showing diminishing volumes for the last five weeks indicating that what ever is happening is on very less volumes. But one thing which has happened during the last week is that nifty has formed a hammer indicating bulls have gained upper hand at-least for the time being. So keep a close watch on the weekly chart as of now in next two to three weeks we might get clear signal from the market on weekly charts which will be a significant event and would pave way for the bigger movement of the market in either direction. So keep a close watch as next two to three weeks will pave way for a huge profit opportunity.
On monthly charts, there is some divergences on the oscillators it self, while TRIX is showing strength for the bears, RSI and MACD has indicating strength for the bulls. MACD has given a buy signal in the month of July 2009. MACD has given a buy signal from below zero and is moving up. This is extremely bullish sign, which indicates that market might move up substantially in longer term. Previous to this MACD has given a buy signal in 2004 and was rising and in buy mode up to march 2008 where sell signal was given and subsequently to moved down below zero and now has given a buy signal below the zero line and moving up. As on monthly charts the buy or sell signals, indicate a significant change in the market sentiment in longer term. As MACD has just give buy mode and moving up, and it is only second time in last five years we can safely assume that we might be heading for good days in the markets in the months or years to come.
So now we can safely assume that on daily charts its indicating weakness, on weekly charts its indicating strength of bulls but weakening and on monthly charts it extremely bullish indicating that once the short term picture turns bullish we can see the markets moving significantly. The charts are indicating that the correction which might happen in the market in the coming week or month is going to be short lived and once the correction if it happens is over we can have fair chances of market moving significantly up to higher levels.
Directional Momentum Index:
DMI is has moved from 14.20 to 15.19 and has just given a sell singal i.e. -D has moved above +D. The downward movement of DMI is a clear indication of lack of direction. 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. On weekly chart the DMI is in buy mode and is moving down indicating the bulls are loosing ground. Even though +D line is above –D line the distance between the same is narrowing indicating that bulls are losing ground.
Pivot Point Trading Strategy:
As per this strategy the nifty is just above the pivot point and it has chances of moving towards 4613 and 4698 in the coming week. Any failure of nifty to move above 4613 will pave wave for nifty to move towards 4408. So the range for the market in the coming week is going to be around 4288-4698.
Turtle Trading:
Turtle Trading - 20 day Phenomenon
Current trend – Neutral
Go long above - 4731
Square off - NA.
Go short below: 4353
ATR at 123
M.Sri Mahidar
Sunday 23rd August 2009 Time 8:40:45 PM IST.
Trend is friend.
As per this strategy the nifty is just above the pivot point and it has chances of moving towards 4613 and 4698 in the coming week. Any failure of nifty to move above 4613 will pave wave for nifty to move towards 4408. So the range for the market in the coming week is going to be around 4288-4698.Turtle Trading:
Turtle Trading - 20 day Phenomenon
Current trend – Neutral
Go long above - 4731
Square off - NA.
Go short below: 4353
ATR at 123
M.Sri Mahidar
Sunday 23rd August 2009 Time 8:40:45 PM IST.
Trend is friend.
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