Nifty during the week moved in a close range. It was very frustrating for traders during the week as the behavior of the market was very peculiar. It was gap up opening and another day gap down opening and was directionless. For the last three week nifty has been moving in a very tight range of around 200 points, it was finding resistance at 5600 and support at around 5300 levels. One of the features of the current movement is that the movement during the last three weeks is on very low volumes that the average indicating the traders are not sure which direction of the market and they are not betting on the direction. Now we have to see for break out away from these two levels and whichever the direction the break out the movement would be big and the market would move in that directions in a big way so patiently wait for the same, but the odds are in favor of downward break out the reason for the same is given in the following lines. As I have been indicating for the last so many weeks nifty is trading below 200 day, 100 day and 50 day EMAs which is generally a bearish signal. Nifty is finding resistance 50 day EMA it failed twice to move above it in last three weeks and this is a bearish signal and is pointing that selling pressure is coming at around 50 day EMA. Even if it moves above 50 day EMA, 200 and 100 day EMA are just above it and it appears that it would not be easy for the market to pierce at this point of time. One of the thing which I have indicated earlier also that 50 day EMA has moved below 100 day EMA and this has happened for the first time after April 2009, generally this is known as a deadly cross and a very bearish signal and another point to be noted is that the distance between them is increasing indicating the strength of the bears is increasing and further downwards are not ruled out
It can be seen in the above chart that nifty has failed to move above the 50 day and the 100 day EMA and also can be seen that the distance between the 50 day and 200 day EMA which is a very bearish signal. So all this is pointing towards bearish break down. So till nifty closes above all these three EMA bulls cannot feel comfortable, so till nifty closes above 5700 nothing can be said for bulls.
On weekly chart nifty has formed an inverted hammer indicating bears were strong at the end of the week. Bulls have tried to take the market up but failed to sustain and bears were successful in keeping the market down. In the coming week selling should come to confirm the bearishness. Also the closing on Friday would not give comfort to the bulls.
Nifty has huge support at around 5200 levels, so any close below it on daily and preferably weekly basis would be a very bearish signal and we have all chances of nifty moving towards 5000 and sub 5000 levels towards 4700 levesl.
Negatives for the market:
· Nifty is trading below 50 day, 100 day and 200 Day EMA.
· Weekly MACD is in sell mode indicating weakness in the market and also every rise would be sold into.
· Monthly MACD has given a sell signal indicating extreme weakness in the market.
· The deadly cross of 50 day EMA moving blow 100 day EMA and also 200 day EMA has happened which is clearly indicating extreme weakness. And on Friday it moved below 15 day EMA.
· Daily stochastic oscillator is in sell mode.
· Daily MACD is about to give a sell signal any slight movement on down side would generate sell signal in MACD.
Positives developing:
· Daily MACD has given a buy signal.
· Weekly Stochastic oscillator has just give a buy signal
Elliott wave analysis:
Generally Elliott wave give a clear picture when there is uncertainty, and Elliotte is giving the same. in the chart the larger wave count is given in red color and the further lower structure is given in blue wave count and the further lower wave count is given in black color. It appears from the chart that we are in the third of the third wave and in the third wave we are nearing the completion of the fourth wave, after completion of which we should start a fifth wave which would take the market down. Here the wave-iv appears to have formed a triangle and there is alteration between the 2nd and fourth wave and also the second wave was very short and swift and the fourth wave is slow and time consuming indicating the confirmation of the pattern and also during the formation of triangle the volumes decrease considerably and would increase at the time of break down. For the last few week till the time the triangle has started to form the volumes has decreased considerably confirming the pattern. I am not sure at this point of time whether wave –v of the triangle is complete or not. but sure that on completion of the same the market would fall down swiftly towards 5200 and then 5000 levels at-least. So wait for the break out. nifty should not in any case move above 5700 to confirm this pattern any move above 5700 would negate this pattern and at that time I would give you the alternate structure.
Pivot Point Analysis:
As per pivot point analysis, yearly Pivot is at 5716 and it is clearly gives an indication that nifty is blow the yearly pivot and which is a bearish indication and till it is below it, it has chances of moving towards s1 and s2. S1 is placed at 5093 and s2 is placed at 4053 so till nifty stays below the pivot of 5716 we can see nifty drifting towards 5093 and 4093. So now currently 5093 should offer support to the market so watch out for market to move to these levels.
M.Sri Mahidar
Trend is Friend.
Sunday, March 20th 19.46 IST
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