Weekly technical Analysis for week ended 25th September 2010.
This weeks also the market has closed on a positive note. It opened on a strong note and continued upwards movement moved above the psychological level of 6000 and finally closed above 6000. The weekly close above 6000 is a very important as it proves that bulls have taken firm control of the market and it appears that they are not in a position to leave the market in a hurry. This week the market has completed 18 weeks of continues rise and it appears that market has all chances of rising up to completion of the next Fibonacci i.e. 21 so we can see market rising for another three weeks at-least. Whether the market would rise to that extent it appears to be so. Any correction before that would be short lived. By the end of this month we would be completing nineteen months of continues rise and here also we have all chances of market rising for another two months so we can easily rise up-to and end of November and it appears that this time also we would be making a new high in month of coming January which might not be tested in years to come. At this point of time it appears to be so.

Positives for Nifty:

§ Market is above 200 day EMA.
§ Market is above 50 day or 100 day EMA.
§ Weekly MACD is in a buy mode.
§ Weekly RSI has started to move up sharply indicating strength of up move( it has confirmed the strength)
§ Weekly stochastic is in buy mode.
§ + D1 as moved above -D1 indicating that bulls have gained upper hand and only now DMI should start moving up to indicate strength of bulls. DMI has also started to move up and at present is at 18(weekly) and any move above 20 would confirm the trend the up movement of DMI itself is indicating that the bulls are gaining upper hand.
Negatives for nifty:

§ Daily stochastic is in over bought zone and has given a sell signal and moving down, as weekly stochastic is in buy mode we might see market moving up after slight correction.
§ The rise is on –ve divergences with MACD histogram and also RSI.

Elliotte wave:

Last week I have said that I would be furnishing the new wave structure as market have decisively moved past 5800 levels. This week I would try to furnish the probable structure as per Elliott wave and the probable length and also the probable time period during which it is going to be achieved.

I have slightly modified the wave structure after market has moved above, negating my earlier wave structure. When earlier wave structure was furnished we have clearly indicated that the wave structure would be negated when market moves above 5800 accordingly now I have furnished the updated wave structure which is fitting into place perfectly.

The up move still appears to be corrective and it appears that wave-A is from low of March 2009 of 2539 to high of July 2009 at 4693 a rise of 2154 points i.e. a rise of 14 continues weeks or around three months. And from June 2009 onwards we have formed a corrective wave, which is in form of double flat which is indicated in the chart which lasted for nearly 11 months (this time not a Fibonacci) and completed wave-B at a low of 4786. You may be having a doubt as to generally the corrective wave should be below the high of the impulse wave-A (where in high of 4693). In the present case the structure was of a running double flat. The running double flat indicates the strength of the coming impulse wave. In the present case it is up so on completion of the running double flat the market should move very very swiftly and that is what it is doing now.
In the above chart I have shown only the externals and in the earlier chart I have shown also the internals. Now you may be having a doubt as to what the probable target and the time period within which it is going to achieve. Generally it is very difficult to predict the probable high. But there is not wrong in anticipating the same. As you are aware that market generally moves in parallel channels. And if it is true then we have to see the market trying to reach the top trend line which is touching wave-A in the above chart. As of now I cannot show it in the chart as it cannot be expolate in my chart as the soft wave does not allow the same. Buy we can arrive at the probable targets for the same. Generally wave-C would imitate wave-A either time wise or the value wise or Fibonacci relations of the same. Time wise wave-A have taken around 3 months and we wave-C has taken more than 3 months so we can expect the wave-C be equaling wave-A in value terms or Fibonacci relationship of the same.

Wave-A is of length 2154 points indicated in the first chart. The length of the wave-C would be of length 2154 points from the end of wave-B which happens to be around 4786 so the target for the same comes to around 6940 points. So that is the probable target which it might achieve if not achieved then the Fibonacci relations would surely achieved. So we can see a new high in the coming weeks. Now you may be having doubt as to whether the time which it would be achieved, the time period would generally be Fibonacci relations with time period of wave-A, i.e. Fibonacci relations with 3, 161.8% or 261.8% of 3 so the target comes to around 5 to 8 months. So we have completed 4 months so we have chances of rising for another one to three months.

One important point to be noted is that till 5500 level is maintained we have no doubt of achieving the targets. If it is violated then there is doubtful of achieving the same. One point to be noted is that the till the faster retracement on the down side takes place the trend would remain up.

Directional Momentum index:

+D1 is above –D1 and is moving up and also DMI is place at above 40 so we might see very very swift movement in the market. Also DMI has moved above +D1 indicating that bulls are gaining in confidence and we can see healthy movement in coming weeks.

M.Sri Mahidar
Sunday 26th September 2010, Time 20.53 IST
Trend is friend

weekly update

Weekly technical Analysis for week ended 18th September 2010.
Nifty has opened on a very strong note on Monday and has continued to move up through out the week. On of the noticing features of the current move is that it was able to decisively move past the resistance line from the last one year onwards. Also it indices were able to break above the trading pattern for the last one year. The movement past the trading range at this point of time implies that the bulls are under full control of the market. It appears the bears are running for cover for the last few weeks. One of the noticing features of the current move is that the break out was on good volumes more that that during the consolidation period. The point now becoming interesting is the follow up action of the market in the coming weeks. There are times when the markets break above the resistances decisively and there after reverse down wards with vengeance. In this case till the 5500 level is intact on weekly basis there should be no problem for the bulls. If and only if 5500 is violated on down side then we should thing of market moving down other wise we can see it inching towards 6000 and most probably towards the new high above 6359. Till 5500 is not violated we have all possible chances of making a new high.

By this week we have completed 17 weeks of continues rise from the may lows and the next Fibonacci is only at 21 so we should see markets rallying up wards at-least for the next one month. The corrections if any should be short and swift and bulls would eventually try to take the market up. On large time frame point of view we are into the 19th months of continues rise from the march 2009 lows and as per this we should at-least rise for another two months to complete next Fibonacci i.e upto the end of November 2010 and only try to correct after that only. So we have to see where these Fibonacci time periods are adhered to or not. So just watch at those time period if the markets keep continues to rise till that time periods. On point is to be noted is that till the faster retracement of the last wave takes place we are into the bull market only and bulls need not fear. This thing I was referring to from so many months you see till not it is not violated and you see the bull market is still intact. So if you want to be bearish you have to wait for faster retracement.

it can be seen from the above chart that we have successfully broke above the trading range for the last one year and we are way above it. Please notice the volumes also which are on high side on break out. Till the support lines are not violated we can be sure of further upward movement of the market. the another perspective as per wolf wave is furnished below.

Wolf Wave:

One point to be noted is that index seems to have formed wolf wave pattern. All the requirement of Wolfe wave pattern are in place, also the volumes at the end of the fifth wave are also strong. Only when it moved below the support line (upper blue line) the completion of the wolf wave is confirmed till then its not completed. If nifty moves below the support line then it has very easy chance of moving below towards the target area which happens to be around 4000 so till 5550 is not broken bulls should have not problem as per this pattern.

Positives for Nifty:
§ Market is above 200 day EMA.
§ Market is above 50 day or 100 day EMA.
§ Weekly MACD is in a buy mode.
§ Weekly RSI has started to move up sharply indicating strength of up move( it has confirmed the strength)
§ Weekly stochastic is in buy mode.
§ + D1 as moved above -D1 indicating that bulls have gained upper hand and only now DMI should start moving up to indicate strength of bulls. DMI has also started to move up and at present is at 16 and any move above 20 would confirm the trend the up movement of DMI itself is indicating that the bulls are gaining upper hand.
Negatives for nifty:

§ Daily stochastic is in over bought zone and is about to break below so we can see a bit of weakness in short term.
§ Weekly stochastic is in extremely over bought zone.
§ The rise is on –ve divergences with MACD histogram and also RSI.
§ Daily MACD has given a sell signal
Elliotte wave:
Nifty has moved above the 5885 and now I have to chance the wave structure and the updated wave structure would be furnished to you probably next week.

M.Sri Mahidar
Sunday 19th September 2010, Time 20.12 IST
Trend is friend

Weekly technical Analysis for week ended 11th September 2010.
As anticipated nifty is slowly inching upwards. The movement of nifty during the week is somewhat confirming the upward break out and we may not be surprised if nifty slowly moves further upwards. Nifty is still not out of woods as there seems to be some what huge resistances levels which are coming in it’s upwards movement. Nifty is still in the trading range from the last one year onwards. And till it breaks above it with volumes the upward movement is doubtful. But as the saying goes the market is king as it is now moving up there is no arguing with it, it knows some thing which the market participants. Nifty has made a 52 high during the week indicating the confirmation of the trend. All the four days in the week were positive indicating that the bulls did not bow to bears not even for a single day indicating the strength of the bulls. On weekly and monthly chars also the market seems to have given a clear break out indicating that we might have broken out of the trend so till nifty is above 5350 we can see upwards movement of nifty towards 5800 levels. So be prepared for it.

By the completion of the current week nifty has been continually rising for 16 continue weeks. This is the longest rise in time period wise in the current up-move from March 2009 onwards, previous up-move was for a period of 14 weeks from march 2009 to June 2009. During the previous up move nifty has doubled from its low levels and in the current up move is has just risen by 20% only. Thus indicating that bulls have been cautiously moving up and at every state bears were giving good fight but bulls are continually moving up. One of the noticing features or the distinctive features in the current up move and also the previous up move in March 2009 and June 2009 is that in the March to June 2009 up move the movement was a virtually vertical rise without any black candle in the weekly charts and was also the up move started with a positive divergence. And in the current up move the entire up-move was on –ve divergence of all the technical indicators. The upwards movement of the market associated with –ve divergences is somewhat making the rise doubtful. But technically the faster retracement of the last rise takes place there is not chance of the reversal indication. So till that happens we are still in a up trend.

Time period point of view as indicated above we have completed 16 weeks of rise, and as the saying goes we have all the possible chances of market rising for another 5 weeks to complete the next Fibonacci number. So we should hope that the market would rise for another 5 weeks so complete the Fibonacci so we should see market rising up in the coming weeks and also entire months also.

In the longer time frame we have completed 18 months and we are into the 19 month and as per this we should be heading for the next Fibonacci i.e. 21. So considering this we should atleast move up for another 2 months and we have all the probable chances of making a top in January 2011 or around that time. So January top is not new to Indian market and if the market rises up to that time we should be very very carefull.

The above chart is nifty monthly chart and it can be seen that it is clearly in the up trend and also the market is still in the channel which is in existence for last one year or so. So any firm close above 5750 only would propel the market to a probable above 6000 levels. so till the break above the resistance level would confirm the trend. As I have been pointing from several months, till the faster retracement of the last wave happens we are in a up move and we should continue to be up move till the faster retracement on down sides takes place.

Positives for Nifty:

§ Market is above 200 day EMA.
§ Market is above 50 day or 100 day EMA.
§ Weekly MACD is in a buy mode.
§ Weekly RSI has started to move up sharply indicating strength of up move.
§ Negatives for nifty:

§ The rise is on –ve divergences with MACD histogram and also RSI.
§ Daily MACD has given a sell signal
§ + D1 as moved above -D1 indicating that bulls have gained upper hand and only now DMI should start moving up to indicate strength of bulls. The slackness of DMI is indicating that bulls lack strength as of now.

Elliotte wave:
As nifty has broken above the 5585 and is moving up I have to rework on my elliotte waves and would furnish the same once it if finalized. Now I would try to furnish the wave pattern from the current wave from May onwards.

It can be seen from the chart that nifty is in the fifth wave of the current rise. It can be seen that the 3rd wave has clearly split into five waves indicating that it might be the extended wave and we are in the fifth wave after completion of which we might see a correction not seen in the last four months. It can also see that there is alteration in the wave-1 and IV which are the prerequisites of the wave pattern. It can be seen that the 4th wave has formed into an expanded triangle and it has split exactly into five waves.We can see fifth wave extension also in which case we can see very swift movement of the index now and in it the 5th wave would also be extended. So keep a close watch on the wave structure.
M.Sri Mahidar
Sunday 12th September 2010, Time 21.41 IST
Trend is friend

Weekly technical Analysis for week ended 4th September 2010.
Nifty opened on a weak note and moved down and touched the support zone of 5350 and there after bounced with a vengeance. I have indicated in my last weeks update that 5350 is very crucial support level and bears can be sure only below it. Nifty exactly bounced at that level in-fact it made a low of 5348 and bounced from there thus indicating that bulls are still in control of the market and further upsides are not ruled till 5350 is not taken out at-least for the time being. On going forward the level might change but as of now 5350 is the levels which bulls have to defend. The recovery of the market during the last weeks indicate that further upsides in the market are not ruled out. The recovery would be genuine if the market is able to close above its 52 week high in the coming weeks. if selling pressure comes and market is not able move above 5600 then market would again look for its support at 5350. So as of now 5600 on upper side and 5350 on the lower side are the two levels to be watched out. Any breach of these levels and also close above or blow these levels would indicate either a good move on upside if 5600 is successfully breached and any breach of 5350 would result in healthy fall.

By The completion of this month i.e. august we have completed 18 months of rise, and we are into 19 months, and the next immediate Fibonacci happens to be only 21. So as far as time series analysis is considered, nifty has all chances of moving up or staying at these levels for another three months including this month. As far as Fibonacci time series analysis is considered we can see a good correction only in the month of December 2010 or January 2011. Historically September has been good months for the bulls if we see from 2003 onwards all the Septembers have closed in green and has made a surprisingly 52 weeks highs except 2008 where in it has made 52 week lows. So if we see historically we should have good month and possible 52 weeks high. Whether history would repeat itself or defy it we have to wait and watch.

As far as the current rise from may lows are considered, we are into 15th week and the next immediate Fibonacci is 21, will we see the market raising for another continues 5 weeks. for me it appears not to be like that if market is not able to make a new high this week or in coming two weeks. Why? If you see the current up move from may 2010 the market has rise for 13 weeks and after that corrected in 14th week and we have now completed 15 weeks. so till it makes a new high nothing can be said bout that.

This time I would be furnishing a interesting observation, which is in place for the current rise from March 2009 onwards. You might be thinking what it is? It has been observed that nifty has been rising continually for three months and then corrects for one month and then again raises for another three months with exeption of November, December 2009 where in it has risen for two months only. The same is depicted in the chart below.

If we observe the chart there is interesting phenomenon developing, we can clearly observe that first the market has rise for three months and corrected for one month, then again risen for three months and then corrected for one month, next risen for three months and a gain corrected for one months and again the current rise from may 2010 we have completed 3 months and we have just entered 4th months prompting us to estimate that we should correct to keep the sequence in place.
Another thing to be observed in the chart is that there is some sequence being followed which is 3-1-3-1-2-1-3-1-3(current), the blue one are rises and the black ones are fall. It can be seen that in the beginning two rises for three months and then the subsequent rise was for two months and there after another two rises are for 3 months each. If we go by sequence then we can see the market correct for one month and there after rise for another two months there by completing a Fibonacci of 21 months. So we have to see whether the same would be followed or not. One thing is sure that when ever the fall happens for two consecutive completed months then we can be sure that correction has started till then bulls enjoy the market.

Positives for Nifty:

§ Market is above 200 day EMA.
§ Market is above 50 day or 100 day EMA.
§ Weekly MACD is in a buy mode.
§ Weekly RSI has started to move up sharply indicating strength of up move.
§ Negatives for nifty:

§ The rise is on –ve divergences with MACD histogram and also RSI.
§ Daily MACD has given a sell signal
§ + D1 as moved above -D1 indicating that bulls have gained upper hand and only now DMI should start moving up to indicate strength of bulls. The slackness of DMI is indicating that bulls lack strength as of now.

M.Sri Mahidar
Sunday 5th September 2010, Time 20.12 IST
Trend is friend