Nifty opened on a strong note gone past 5300 made a high of 5329 and thereafter for the next two days it corrected made a low of 2534 and on Friday late recovery it recovered and finally closed at 5290. Nifty closed with a black candle during the week first time after seven weeks meaning that the close was lower that the week open indicating that the bears might has just sneaked into the market for very short term. The coming week would provide whether they are successful or not at least for the short term. Till nifty does not go below 5200 there is no problem for bulls. It may be noted that nifty has once again falied to close above 5300. Bulls have tried to take it above 5300 at least thrice in the last four months and they have failed all the three times. But whenever the 5300 is taken out we might see a healthy movement in nifty. But at this point of time it appears to be an uphill task for the bulls to take nifty above that. The break above 5300 should be on heavy volumes then only the break would be confirmed or other wise it might prove to be false break out. So we have to keep a close watch on the volumes. I have been seeing in all the news papers the FIIs have been continually buying the market but the volumes are continually decreasing as per charts, even this is baffling me. This is indicating that the FIIs might be putting the money in derivatives rather than cash market. After budget FIIs have pumped huge sums of money in the market after the budget but then also they are not able to take the market higher, it is still stuck at that level only. Nifty has been trading in this range from last six to seven months. So we have to seen where FIIs are investing as that might be a eye opener for us.
Nifty has completed 13 months of continues rise from low of 2539 on 6th of March 2009. So we might be cautious at higher levels during the coming month as generally markets corrected after completion of 13 months. As I have been saying from last two to three months that historically nifty has rose for a continually for more that 13 months only once so we have all fair chances of markets correcting in the coming month. Please do-not take a pre-emptive decision that the markets would correct, the market has yet to confirm the same. The market is showing weakness for last four to five months but still not confirmed the same till it confirms we have to be on long side or to be out of the market.
Nifty is forming a very interesting pattern which is indicated in the chart above. The pattern is know as “three fan principle”. Each line is known as fan.Mind you this is very very power full indicator, one of the peculiar feature of the pattern is that it forms in both bull and bear market. When it forms in bull market (raising) any breach of the third fan would signal the end of the uptrend and when in bear market the break of the third fan would signal the end of the down turn. As has been indicated this is very powerful indicator. I have seen previously also the pattern has given very good results. So we have to very very closely watch the third fan and breach of the third fan would signal of the end of the uptrend. The trend line at present appears to be 5100. So as on now till 5100 is not violated there should be no problem for bull and any breach of that level should be disastrous for the bulls. So keep a close watch on the third fan.
Positives for Nifty:
· Market is above 200 day EMA.
· Market is above 15 day and 100 day EMA.
· Daily and weekly MACD is in buy mode.
· DMI is given buy signal but DMI is virtually flat during all the rise indicating that bulls are not as strong as they are ought to be.
Negatives for nifty:
· Weekly TRIX are still in sell mode.
Elliotte wave analysis: there is nothing new to the mentioned than that is mentioned in last week.
Directional Momentum index – (DMI)
Currently the +D1 is above –D1 DMI is slightly moving up indicating the strength of the bulls. But the +D1 is moving down indicating that the bulls might be losing momentum. So we have to see whether bears would be successful in taking market down.
Pivot Point Analysis:
M.Sri Mahidar
Saturday 3rd April 2010, Time 21.41 IST
Trend is friend
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