Weekly technical Analysis for week ended 15th May 2010
Nifty showed mixed strength this week, on Monday it rose very viscously and till the end of the weak it failed to move above this level and on Friday during the later part it has collapsed. Nifty is finding good amount of resistance at 5200. So it appears that it is the crucial for nifty for any further upside movement. One of the puzzling features of current weeks movement is that the volumes have been decreasing on each day. It appears that nifty has good support level at 5000 at-least for the short term. Any break below 5000 has all chances of taking nifty towards 4700 levels. During the entire week nifty has been moving between 100 day EMA and 50 day EMA. It has attempted to move above 50 day EMA at-least twice during the week( indicated by two arrows in the charts below) and failed in its two attempts indicating weakness. So now 50 day EMA appears to be crucial levels to be broken for it to show strength. It may also be noted is that 15 day EMA has also moved below 50 day EMA indicating that weakness might have returned to the market. On Friday it has moved below 100 day EMA also indicating further weakness. Whenever one moving average is which is acting as support is taken out that acts as resistance and market or stocks moves towards next EMA. In the present case nifty has moved below 15 day, 50 day and 100 day EMA so we have chances of it moving towards 200 day EMA which happens to be at around 4900 levels. Whether nifty would move towards 200 day EMA or not we have to wait and watch. Over the last one year 100 day EMA was acting as a good support level and nifty has rebounded on taking support at that level and this is the first time in the last one year that it has moved below 50 day EMA then it moved above it and once again moved blow it on Friday all during one week. The movement above it and also movement below it within one weak signifies that bulls has not been in a position to maintain market above that level.
On weekly chart nifty has formed inverted hammer indicating the strength of the bears. I have been indicating from the last few weeks that we have completed 13 months and we are into 15th month and till now nifty has not made any new high so signaling weakness. One of the noticing features of the current movement is that nifty has making lower lows and lower highs for that last one month. Any movement of nifty below 4984 to keep the trend continuing. If nifty fails to move below 4984 then it indicates that bears have failed to take the market down and then we might see swift movement. On larger time frame nifty has to move below 4675 to confirm the weakness.
As per time series analysis, I have been indicating earlier when ever market has corrected it has been correcting anywhere between 3 to five weeks and I have also indicated that any violation of the same would indicate either strength or weakness it seems you are “puzzled” ok now I would elaborate. If nifty fall for more that 5 weeks then it would indicate weakness as bears have been successful to keep the market low. And if it falls for less than three weeks this would indicate strength of bulls. In the present case we have completed 5 weeks of fall by the end of this week, if the fall continues for this week also then it is the violation of the time series analysis and which shows that market has fallen for six weeks indicating that bears have gained upper hand and they were successful in keeping market down. In that case we might see faster retracement also. We may also see tables reversing i.e 10 weeks fall and also 5 weeks rise which was the case in the case of previous bear market. So wait and see
Nifty showed mixed strength this week, on Monday it rose very viscously and till the end of the weak it failed to move above this level and on Friday during the later part it has collapsed. Nifty is finding good amount of resistance at 5200. So it appears that it is the crucial for nifty for any further upside movement. One of the puzzling features of current weeks movement is that the volumes have been decreasing on each day. It appears that nifty has good support level at 5000 at-least for the short term. Any break below 5000 has all chances of taking nifty towards 4700 levels. During the entire week nifty has been moving between 100 day EMA and 50 day EMA. It has attempted to move above 50 day EMA at-least twice during the week( indicated by two arrows in the charts below) and failed in its two attempts indicating weakness. So now 50 day EMA appears to be crucial levels to be broken for it to show strength. It may also be noted is that 15 day EMA has also moved below 50 day EMA indicating that weakness might have returned to the market. On Friday it has moved below 100 day EMA also indicating further weakness. Whenever one moving average is which is acting as support is taken out that acts as resistance and market or stocks moves towards next EMA. In the present case nifty has moved below 15 day, 50 day and 100 day EMA so we have chances of it moving towards 200 day EMA which happens to be at around 4900 levels. Whether nifty would move towards 200 day EMA or not we have to wait and watch. Over the last one year 100 day EMA was acting as a good support level and nifty has rebounded on taking support at that level and this is the first time in the last one year that it has moved below 50 day EMA then it moved above it and once again moved blow it on Friday all during one week. The movement above it and also movement below it within one weak signifies that bulls has not been in a position to maintain market above that level.
On weekly chart nifty has formed inverted hammer indicating the strength of the bears. I have been indicating from the last few weeks that we have completed 13 months and we are into 15th month and till now nifty has not made any new high so signaling weakness. One of the noticing features of the current movement is that nifty has making lower lows and lower highs for that last one month. Any movement of nifty below 4984 to keep the trend continuing. If nifty fails to move below 4984 then it indicates that bears have failed to take the market down and then we might see swift movement. On larger time frame nifty has to move below 4675 to confirm the weakness.
As per time series analysis, I have been indicating earlier when ever market has corrected it has been correcting anywhere between 3 to five weeks and I have also indicated that any violation of the same would indicate either strength or weakness it seems you are “puzzled” ok now I would elaborate. If nifty fall for more that 5 weeks then it would indicate weakness as bears have been successful to keep the market low. And if it falls for less than three weeks this would indicate strength of bulls. In the present case we have completed 5 weeks of fall by the end of this week, if the fall continues for this week also then it is the violation of the time series analysis and which shows that market has fallen for six weeks indicating that bears have gained upper hand and they were successful in keeping market down. In that case we might see faster retracement also. We may also see tables reversing i.e 10 weeks fall and also 5 weeks rise which was the case in the case of previous bear market. So wait and see
what is in store for market.
Positives for Nifty:
· Market is above 200 day EMA.
Negatives for nifty:
· Nifty is below 15 day,50 day and 100 day EMA.
· 15 day EMA has moved below 50 day EMA.
· Daily MACD has given a sell signal.
· Daily and Weekly TRIX are still in sell mode.
· Weekly MACD has given sell signal immediately after giving a buy signal indicating extreme weakness in the market.
· DMI has moved above 20 presently at 24 indicating strength of bears.
Elliott wave:-
In my weekly technical analysis as on 27th March 2010 I have indicated that as per Elliott in case of first wave extention it would be difficult for the market to move past 5420 and till not market has not moved above 5420 it virtually made a high of 5399 but did not go past 5420 thus confirming that pattern and also target. This is also giving an indication that we might have topped out. The targets as per Elliott would depend on the pattern which it is expected to form. I would be furnishing the same after I have completed the same till those times enjoy the ride, probably bear ride. The probable structure is given in the below chart. It may be noted that any move and close above 5250 would negate the present structure.
· Market is above 200 day EMA.
Negatives for nifty:
· Nifty is below 15 day,50 day and 100 day EMA.
· 15 day EMA has moved below 50 day EMA.
· Daily MACD has given a sell signal.
· Daily and Weekly TRIX are still in sell mode.
· Weekly MACD has given sell signal immediately after giving a buy signal indicating extreme weakness in the market.
· DMI has moved above 20 presently at 24 indicating strength of bears.
Elliott wave:-
In my weekly technical analysis as on 27th March 2010 I have indicated that as per Elliott in case of first wave extention it would be difficult for the market to move past 5420 and till not market has not moved above 5420 it virtually made a high of 5399 but did not go past 5420 thus confirming that pattern and also target. This is also giving an indication that we might have topped out. The targets as per Elliott would depend on the pattern which it is expected to form. I would be furnishing the same after I have completed the same till those times enjoy the ride, probably bear ride. The probable structure is given in the below chart. It may be noted that any move and close above 5250 would negate the present structure.
Directional Momentum index – (DMI)
+D1 has moved above –D1 and has reached 37 and also DMI has started to move up and it has moved above 20 during the week indicating that bears have taken control of the market and further down sides are not ruled out. currently DMI is placed at 26 and is moving up any further move might take market further down.
M.Sri Mahidar
Sunday 16th May 2010, Time 18.11 IST
Trend is friend
