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.
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
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