Nifty Weekly Technical Update for week ended September 26th, 2009.
During this week nifty has closed on positive note on Monday only and went on to make a 5036 and on that day closed above 5000 and there after corrected and closed below 5000 at 4958. During the entire week nifty was showing signs of weakness and also appears to be indecisive. The formation of doji on weekly charts is clearly indicating indecisiveness in the market. One of the positive things of the fall is that the fall during the week was on very low volumes compared to last week. This is clearly giving an indication that there is no panic selling in the fall. Nifty is still above the 15 day low EMA which is at 4840 so till nifty is above 4840 there will be not danger to the bull run and also the last few months trend line also. During the last six months nifty has gone below the 15 day low EMA decisively only once and has taken very good support nearly two times. Considering this 4840 becomes a crucial level for bears. Any movement below that will give strength to the bears. One of the other positive things is that DMI which gives the strength of the current trend has moved above 25 and is now stationed at around 29 indicating that bulls are having strength and clearly giving an indication that we should not make an attempt to short but we should see for an opportunity to go long on every fall. But once 4840 is taken out the strategy should be reversed.
It may be noted that any breach of 4800 decisively should be taken as an opportunity to come into cash at-least 50% of the portfolio. And any breach of 4693 we should come into 100% cash.
Positives for the market
• Nifty is still above the 15 day low EMA
• DMI is moving up and the trend in favor of bulls.
• The trend line of the rise is still intact.
Negative for market.
• -ve divergances still exists in oscillators – ROC, RSI, Elder bull ray
• Volumes are not still increasing.
Elliotte wave analysis:
As per Fibonacci markets are rising from March 2009 onwards and have completed 6 months are now we have entered seventh month and we have made new high in 7th month indicating that we might see the market raising for the next Fibonacci number which happens to be 8 so we might see the market rising upto eight months from march 13 so we has all the fair chances of seeing markets raising at least upto November 2009. if Fibonacci has to be proved correct then we have all the fair chances of nifty rising till November. I have seen from last five to six years that Fibonacci has proved correct majority of the times and as far as I can remember there are only one to two failures in last six years. So odds are in favor of current trend upto at least November. So it appears that this diwali would be a good one for the investors.
Another point which I am driving from last one or two weeks is that nifty has moved above the 61.8% resistance level of the entire fall from January 2008. The wave started at 6357 January 2008 high and the wave ended in March 2009 at a low of 2539(even though the low was 2225 in October) the end of the wave structure is important. So the total fall was 3818 points. So the 61.8% of the same come to around 2360 points. So the 61.8% resistance comes at 4899 and it has been broken decisively and nifty has closed above it for more than two weeks indicating that we might has broke a significant levels a and not it should become a very good support level. During the current week also nifty has take support at 4900 indicating that 4900 can be a good support level for the nifty. As nifty has moved above the 61.8% resistance level, the corrective ziz-zag pattern which we have been assuming for last six months seems to have been negated. And now there are two patterns which can be assumed they are flat and also might be a triangle. For the time being I am assuming it to be a flat and the triangle would be discussed only when we can interpret the same. In flat we have three waves and it appears that we are still in the wave-A of the higher wave and it appears that in the “A” wave we are in wave-c which is depicted in the following chart.
During this week nifty has closed on positive note on Monday only and went on to make a 5036 and on that day closed above 5000 and there after corrected and closed below 5000 at 4958. During the entire week nifty was showing signs of weakness and also appears to be indecisive. The formation of doji on weekly charts is clearly indicating indecisiveness in the market. One of the positive things of the fall is that the fall during the week was on very low volumes compared to last week. This is clearly giving an indication that there is no panic selling in the fall. Nifty is still above the 15 day low EMA which is at 4840 so till nifty is above 4840 there will be not danger to the bull run and also the last few months trend line also. During the last six months nifty has gone below the 15 day low EMA decisively only once and has taken very good support nearly two times. Considering this 4840 becomes a crucial level for bears. Any movement below that will give strength to the bears. One of the other positive things is that DMI which gives the strength of the current trend has moved above 25 and is now stationed at around 29 indicating that bulls are having strength and clearly giving an indication that we should not make an attempt to short but we should see for an opportunity to go long on every fall. But once 4840 is taken out the strategy should be reversed.
It may be noted that any breach of 4800 decisively should be taken as an opportunity to come into cash at-least 50% of the portfolio. And any breach of 4693 we should come into 100% cash.
Positives for the market
• Nifty is still above the 15 day low EMA
• DMI is moving up and the trend in favor of bulls.
• The trend line of the rise is still intact.
Negative for market.
• -ve divergances still exists in oscillators – ROC, RSI, Elder bull ray
• Volumes are not still increasing.
Elliotte wave analysis:
As per Fibonacci markets are rising from March 2009 onwards and have completed 6 months are now we have entered seventh month and we have made new high in 7th month indicating that we might see the market raising for the next Fibonacci number which happens to be 8 so we might see the market rising upto eight months from march 13 so we has all the fair chances of seeing markets raising at least upto November 2009. if Fibonacci has to be proved correct then we have all the fair chances of nifty rising till November. I have seen from last five to six years that Fibonacci has proved correct majority of the times and as far as I can remember there are only one to two failures in last six years. So odds are in favor of current trend upto at least November. So it appears that this diwali would be a good one for the investors.
Another point which I am driving from last one or two weeks is that nifty has moved above the 61.8% resistance level of the entire fall from January 2008. The wave started at 6357 January 2008 high and the wave ended in March 2009 at a low of 2539(even though the low was 2225 in October) the end of the wave structure is important. So the total fall was 3818 points. So the 61.8% of the same come to around 2360 points. So the 61.8% resistance comes at 4899 and it has been broken decisively and nifty has closed above it for more than two weeks indicating that we might has broke a significant levels a and not it should become a very good support level. During the current week also nifty has take support at 4900 indicating that 4900 can be a good support level for the nifty. As nifty has moved above the 61.8% resistance level, the corrective ziz-zag pattern which we have been assuming for last six months seems to have been negated. And now there are two patterns which can be assumed they are flat and also might be a triangle. For the time being I am assuming it to be a flat and the triangle would be discussed only when we can interpret the same. In flat we have three waves and it appears that we are still in the wave-A of the higher wave and it appears that in the “A” wave we are in wave-c which is depicted in the following chart.
One of the things which I can interpret at this point of time is that nifty is correcting its entire rise from 2003 to January 2008 and the pattern which is forming appears to be a flat at this point of time. And wave “A” of second higher degree is from 6357 to 2539 and now we appear to be in wave-B of the flat and in the wave –B we appear to be in wave –C after completion of the same we might see wave-C on higher degree and in that the fall after the end of wave-C of lower structure we has all the chances of seeing very violent fall which can be more violent that that which is witnessed during the last year. The wave structure from January 2008 high is given below.
If my assumption of flat is right then we are in the wave-C (lower structure) of wave-C (higher structure). The wave – B( of flat) appears to be forming a zigzag which is indicated in chart -1 above.Now we come to assumption of what should be the probable length and target for nifty. Wave-a of the wave –B wave from 2539 to 4693 a rise of about 2154 points and which lasted exactly 3 months which happens to be a Fibonacci and the wave-b wave in form of triangle and which again lasted 3 months which is again a Fibonacci. The what would can be the length of wave-c? wave –c should at-least move above the high of wave-A. High of wave-a is 4693 and nifty has moved above it. So the next target appears to be near 23% of wave-A i.e. it can rise 495 points from the break of the triangle which is around 4700 so the target comes to 5195 if 5195 is taken out the next target comes to 5520. So still the above said targets are to be achieved. One point to be noted that once the high of wave-A which is at 4693 is taken out then we can safely assume that wave-B has completed and we would start a new down wave which has chances of taking the market to easily around 3000 levels. But if it is not taken out then we have all the chances of seeing 5195 and 5520 I have no doubt in mind. So in this scenario keep a very very close watch on 4693 at-least for next one to two weeks.Directional Momentum Index:
DMI is has moved from around 23 to 29 after giving a positing buy indication i.e. movement of +D1 over –D1. The rise of DMI after positive break our is a clear indication that bulls have gained upper hand in the market and they might try all means to decimate bears. It has moved above 20, 25 and now nearing 30 which is clearly giving an indication that we have all fair chances of nifty moving up. Only one concern is that +D1 line is moving down.
Pivot point analysis:
One of the positive things of movement of the nifty for the last two weeks is that nifty has moved above the previous years pivot of 4856 which give a very high target for the nifty but donot be carried away by the same as we might not reach the target. So for the coming week the probable range can be 4896 to 5098.
Turtle Trading:
Turtle Trading - 20 day Phenomenon (gave buy indication at 4743)
Current trend – buy
Go long above – in buy mode
Square off - 4786
Go short below: 4577
ATR at 83
M.Sri Mahidar
Sunday 27th September 2009 Time 8:33:30 PM IST.
Trend is friend
Pivot point analysis:
One of the positive things of movement of the nifty for the last two weeks is that nifty has moved above the previous years pivot of 4856 which give a very high target for the nifty but donot be carried away by the same as we might not reach the target. So for the coming week the probable range can be 4896 to 5098.Turtle Trading:
Turtle Trading - 20 day Phenomenon (gave buy indication at 4743)
Current trend – buy
Go long above – in buy mode
Square off - 4786
Go short below: 4577
ATR at 83
M.Sri Mahidar
Sunday 27th September 2009 Time 8:33:30 PM IST.
Trend is friend
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