Nifty opened on strong note above 5200 and there after moved above 5300, but did not sustain above it and there after started to slide slowly towards 5200 and finally closing at 5244. Except on Monday which was a positive day nifty formed dojis on next two days and there after on the following two days closed in negatively but for the whole week nifty closed positively. The movement in indices is giving a clear indication that when ever market is moving 1% up selling pressure is coming and when ever it fall 1% buying pressure is coming. So not we have to see how bulls are bears would react next week. As the market has took nearly three months to move above 5200 which was the huge resistance for 3 months and has sustained above it for the whole week proves that 5180-5200 would act as a huge support for the market if nifty slides further down sides in earlier part of the week. if 5180-5200 does not offer any resistance then it would be disaster for the market. So the 5180-5200 would offer good resistance in the coming week. Market is still trading above 15 day EMA which is at 5182 which clearly gives an indication that the short term trend of the market is up and any fall should be taken as an opportunity to go long. Any break of 15 day EMA would prompt us to reverse the strategy.
It can be seen from the above chart that nifty is moving in a pattern which I have been discussion for the last few months. So till this structure is sustained/respected then there should be no problem for bulls.
Shorter pattern for last two months is also indicated by blue lines in the chart which is within the bigger pattern. As per this we has support at 5180. According to this if nifty reaches 5180 we can expect a bounce. So be prepared for the same.
Positive for nifty:
• It is still at 15 day,50 day and above 100 day EMA
• RSI has once again moved above 50.
• DMI has given a buy signal – but DMI is moving up currently at 18 has to move above 20 to confirm the trend.
• OBV has once again moved above the trend line from may indicating that we might see a good upward movement in coming weeks.
• Daily MACD and TRIX are in buy mode
Negatives for nifty:
• Weekly MACD and TRIX have given sell signal.
• Huge –ve divergence between RSI on weekly
It can be seen from the above that –ve are decreasing and positives are increasing indicating that bullish sentiment is increasing in the market.
Elliotte wave analysis:
During the last few months I have indicated that as per Elliotte wave 5195 and 5520 are the crucial levels which are to be crossed and nifty has already crossed 5195 and is sustaining above it for last one week indicating that it would make an attempt at 5520 in coming weeks. So we have to watch out for the same in coming weeks. We may not be surprised if it is tested in this month only. Why I have come to the conclusion. As market is above to sustain above 5200 for one week has giving an indication that we should see a swift movement in nifty in coming weeks.
Point and figure charting.
Point and figure charting is one of the oldest forms of charting which takes into account only the price and not other thing. As per P&F price is king every thing is reflected in price. It does not take into account any other technical indicators like MAs,RSI,Etc., thus there are not divergences etc., which might confuse us. This only tells us where the buyers are and where sellers are and that who is winning. In the present case I have indicated in my intra week update that daily, weekly and monthly charts have given bullish breakout above the bearish resistance line which they failed to clear in last two years. So as Per P&F it clearly a bullish market till 5000 is respected. So till market is above 5000 there should be no problem for bulls and they should march on from current levels.
Directional Momentum Index:
DMI is indicating directionless for the market. This week the +D1 line is above the -D1 line and DMI is in neutral zone. During the week DMI has moved up and is currently placed at 18.22. The upward movement of DMI is indicating the bulls are slowly coming into the market. Only its movement above 20 would confirm the trend. So we have to see whether we would see DMI piercing 20 in coming week or not.
Pivot Point Trading Strategy:
During the last week nifty stayed above pivot for the whole week and has exceed the targets fixed by Pivot. For the coming week pivot is at 5240 which is very near to the current closing level of 5244. if it sustains above 5240 we would be seeing 5314 and after that 5383 and if it breaks 5240 we have to see 5171 and 5097.
M.Sri Mahidar
Sunday 10th January 2010 Time 16.50 IST
Trend is Friend.
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