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
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