Nifty Technical update for week ended 22nd November 2009
Nifty was weak whole through out the week and on Friday it reversed all its weekly losses on Friday with a smart recovery thanks to short covering. This is reflected in volumes being less on Friday even though the market rose viciously and every body was caught unawares. Nifty has taken support exactly at the 15 day EMA and bounced back with vengeance giving a clear indication that the 15 day EMA is the crucial support to be broken. But as of now nifty is clearly above it and till the time it is above that there is no problem for bulls. Today also i.e on Monday nifty opened strongly and went on to close above the 5100 level and it may be noted that today also the volumes were less than that of Friday, it cannot be said less but significantly less that that of Friday which is clearly signifying that, even though markets are moving up the volumes are drying up this is one of the peculiar feature which is haunting every body as this is beyond technical. This is clearly raising doubt on the markets strength of the current rise. But what ever may be the case markets are raising and as the saying goes “boss is always right” as is for market also “market is always right”. Do not argue with it, so in the present case all the indicators are pointing towards correction market is still moving up so it is better we be with the market but with caution. RSI is also showing good strength to th market and pointing that further upsides are not ruled out.
It can be seen from the above chart that nifty is moving in a rectangular pattern for the last six months and every time it is touching the lower support line it is going near the upper resistance line. In the fall during the beginning of November the indices have taken support exactly at the support line and moved up vigorously. As per this pattern nifty has all the chances of moving towards 5300 and there after it should correct. But till the lower support line is broken the uptrend is intact. The support line appears to be at 4800 levels so till it is broken the uptrend is intact. So trade accordingly.
Positives for the market :
• Nifty is still above 15, 50 and 100 day Moving average.
• RSI is showing strength and has moved above 70
• DMI has given a sell signal indicating the bears have just gained upper hand
Negative for market.
• The trend line drawn from march low is broken
• Volumes are not still increasing.
• DMI is below the 20 mark indicating the lack of strength for the up move
• On weekly charts TRIX and MACD are in sell mode
Elliotte wave analysis:
There is not much change in the targets given by my in my update on 26th of September 2009. I have given targets of 5195 and 5520 and these two have not been achieved till now and we have to see whether these would be achieved or not. If the 5195 is not taken out then I have not doubt that we will be seeing the lower levels for nifty in weeks to come and surely below 4000.
Directional Momentum Index:
DMI is indicating directionless for the market. So market has to indicate the same so we have to closely watch the DMI as the way it gives a break out the market might move heavily.
Pivot Point Trading Strategy:
Nifty has behaved exactly as per the pivot, R1 for nifty was at 5080 and nifty made a high of 5079 and there after moved down sub-5000 and has taken support exactly at the weekly pivot of 4935 and bounced back to the levels of R1.
For the coming week the pivot is placed at 5021 and if it stays above it we have chances of seeing 5110 and today nifty has achieved it as it made a high of 5113 and then make an attempt at 5168 ( were in 52 week high of nifty is situated) if nifty fails to break above 5168 then we can see nifty making attempt at 5000 levels. so trade accordingly.
Nifty was weak whole through out the week and on Friday it reversed all its weekly losses on Friday with a smart recovery thanks to short covering. This is reflected in volumes being less on Friday even though the market rose viciously and every body was caught unawares. Nifty has taken support exactly at the 15 day EMA and bounced back with vengeance giving a clear indication that the 15 day EMA is the crucial support to be broken. But as of now nifty is clearly above it and till the time it is above that there is no problem for bulls. Today also i.e on Monday nifty opened strongly and went on to close above the 5100 level and it may be noted that today also the volumes were less than that of Friday, it cannot be said less but significantly less that that of Friday which is clearly signifying that, even though markets are moving up the volumes are drying up this is one of the peculiar feature which is haunting every body as this is beyond technical. This is clearly raising doubt on the markets strength of the current rise. But what ever may be the case markets are raising and as the saying goes “boss is always right” as is for market also “market is always right”. Do not argue with it, so in the present case all the indicators are pointing towards correction market is still moving up so it is better we be with the market but with caution. RSI is also showing good strength to th market and pointing that further upsides are not ruled out.
It can be seen from the above chart that nifty is moving in a rectangular pattern for the last six months and every time it is touching the lower support line it is going near the upper resistance line. In the fall during the beginning of November the indices have taken support exactly at the support line and moved up vigorously. As per this pattern nifty has all the chances of moving towards 5300 and there after it should correct. But till the lower support line is broken the uptrend is intact. The support line appears to be at 4800 levels so till it is broken the uptrend is intact. So trade accordingly.
Positives for the market :
• Nifty is still above 15, 50 and 100 day Moving average.
• RSI is showing strength and has moved above 70
• DMI has given a sell signal indicating the bears have just gained upper hand
Negative for market.
• The trend line drawn from march low is broken
• Volumes are not still increasing.
• DMI is below the 20 mark indicating the lack of strength for the up move
• On weekly charts TRIX and MACD are in sell mode
Elliotte wave analysis:
There is not much change in the targets given by my in my update on 26th of September 2009. I have given targets of 5195 and 5520 and these two have not been achieved till now and we have to see whether these would be achieved or not. If the 5195 is not taken out then I have not doubt that we will be seeing the lower levels for nifty in weeks to come and surely below 4000.
Directional Momentum Index:
DMI is indicating directionless for the market. So market has to indicate the same so we have to closely watch the DMI as the way it gives a break out the market might move heavily.
Pivot Point Trading Strategy:
Nifty has behaved exactly as per the pivot, R1 for nifty was at 5080 and nifty made a high of 5079 and there after moved down sub-5000 and has taken support exactly at the weekly pivot of 4935 and bounced back to the levels of R1.
For the coming week the pivot is placed at 5021 and if it stays above it we have chances of seeing 5110 and today nifty has achieved it as it made a high of 5113 and then make an attempt at 5168 ( were in 52 week high of nifty is situated) if nifty fails to break above 5168 then we can see nifty making attempt at 5000 levels. so trade accordingly.
Turtle Trading:
20 day phenomenon has given a buy indication at 5079.
Current trend - buy
Go long above 5113( add to positions)
Square off – 4860
Go short below: 4539(add Positions).
ATR - 94
M.Sri Mahidar
Monday 23rd November 2009 Time 19.55 IST
Trend is Friend.
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