Weekly technical Analysis for week ended 18th December 2010.
Nifty opened on a strong note and has maintained at those levels whole during the week. One of the positive things during the week is that the market has closed nearly at the top during the week and also during the week it has not moved below the low of the week indicating the bulls were successful in maintaining at higher levels thus indicating their strength. It is appearing technically that the market might move up from current levels. Nifty has to move above 6069 to indicate further strength in the market any close above that on weekly basis has chances of taking the market towards 6200 levels. So we have to see whether the market would move and close above those levels or not. i have been mentioning from so many months that we would be completing 21 months of continues rise in November 2010 and chances of market correcting there after and also historically market have rise for a maximum period of 23 months and second highest rise was for 21 months. And we now we have completed exactly 21 months of continues rise and we have entered the 22 months. We have made high in 21st month and started to correct from that month only. Historically we have not see markets correction starting in the month of November. What has happened historically is that markets have corrected in the month of November and in December upto first half of January the markets rise and there after the market falls. We have to see whether the same phenomenon repeats this time also.if this has to happen then we should see the market raising up and making a new high or just go near the high and then fall very fast in the month of January 2010.
One of the point which is indicating the strength of the bears is that the market has broke the 21months trend line in the month of November. This is a very bearish indicating shows the strength of the bulls. Nifty has to move above that trend line to indicate any strength of bulls. This phenomenon has been observed three time earlier also in the last one year where in the trend line has been broken but the market has not corrected significantly and still there are maintaining below that trend lines.
Nifty opened on a strong note and has maintained at those levels whole during the week. One of the positive things during the week is that the market has closed nearly at the top during the week and also during the week it has not moved below the low of the week indicating the bulls were successful in maintaining at higher levels thus indicating their strength. It is appearing technically that the market might move up from current levels. Nifty has to move above 6069 to indicate further strength in the market any close above that on weekly basis has chances of taking the market towards 6200 levels. So we have to see whether the market would move and close above those levels or not. i have been mentioning from so many months that we would be completing 21 months of continues rise in November 2010 and chances of market correcting there after and also historically market have rise for a maximum period of 23 months and second highest rise was for 21 months. And we now we have completed exactly 21 months of continues rise and we have entered the 22 months. We have made high in 21st month and started to correct from that month only. Historically we have not see markets correction starting in the month of November. What has happened historically is that markets have corrected in the month of November and in December upto first half of January the markets rise and there after the market falls. We have to see whether the same phenomenon repeats this time also.if this has to happen then we should see the market raising up and making a new high or just go near the high and then fall very fast in the month of January 2010.
One of the point which is indicating the strength of the bears is that the market has broke the 21months trend line in the month of November. This is a very bearish indicating shows the strength of the bulls. Nifty has to move above that trend line to indicate any strength of bulls. This phenomenon has been observed three time earlier also in the last one year where in the trend line has been broken but the market has not corrected significantly and still there are maintaining below that trend lines.
It can be seen from the above chart that nifty has clearly broke the 21 month trend line and 21 happens to be a Fibonacci so the breakdown can be genuine so we have to see whether nifty move below or not.
It can be seen from the above chart that the nifty has given a break out in September 2010 and after that the same trend should offer itself as support and not it can be seen that it is clearly offering support at present so till this trend line (support line) is held there should be not problem for bulls and we can have all possible chances of nifty or market conquering new highs. So this trend line(support line) is crucial for the market. The trend line appears to be around 5700 levels so till this level is held there should be no problem for bulls and the day it is taken out we can see a very very steep and violent fall in the market. Till then bulls would enjoy the market.
Positives for the market:
· Nifty is above 15 day EMA( moved above this during the week), 100 day EMA and 200 day EMA
· It is exactly placed at the 50 day EMA any move or close above it would strengthen bulls.
· Daily MACD has given a buy signal indicating/strengthening bulls and pointing towards further upside movement in the market.
· Daily and weekly stochastic oscillators are in buy mode indicating strength of bulls.
Negatives for the market:
· Nifty is exactly at 50 day EMA whether it would offer as resistance now or not we have to see.
· Weekly MACD is in sell mode indicating weakness in the market and also every rise would be sold into.
Elliott wave analysis
I have indicated in my earlier update as per Elliott wave we have targets of around 6470, 6850 and 7140. We have to see whether the same would be achieved or not. if the market now moves up 6470 would offer a good amount of resistance from current levels.
There are two alternatives for the market as per Elliott wave which are furnished in the chart below:
The two alternative as per Elliott are furnished above. Under the alternative -1 we might have made a top in November at 6350 and we might have started the down move and we might see market moving up till around 6100-6200 levels and then moving down to around 5200 levels at-least.
Under alternative -2 it appears that we might have completed the wave-4 of the wave -5 and we might have just started the wave-5 of wave-5 and we should see whether it would take the market to a new high or not. If a new high is not made it would indicate a 5th wave failure and we can see market tanking from those levels. Till 5700 is not taken out this option would hold good if broken then the option one would hold good.
M.Sri Mahidar
Trend is Friend.
Sunday, December 19, 2010
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