Weekly technical Analysis for week ended 25th June 2011.
Nifties’ opening of the week was dramatic and the close of the week was more dramatic and it fooled everybody on these two days. Nifty opened on a week note and it was gap down below the two year trend line giving an indication that bears might have finally caught hold of bulls and they would dominate, but bulls were able to defend the earlier bottom February 2011 and there after they were able to take the market up and on Friday virtually decimated bears and bears were made to run for shelter. The movement of the market on Friday has taken above the trend line of two years which it has broken on Monday. The movement above the trend line is an indication that the break down was not successful and bulls were successful in defending the same. The break of the trend line would indicate that weakness and it should not be over looked. Any break of the trend line for the second time in next few weeks then that would be disastrous. Now we have to see whether the movement on Friday was just a flash in the pan or a genuine movement. But technically it appears that it just a technical bounce back. There are so many hurdles which market has to clear before the strength of the bulls can believed. There are so many resistances at 5550 to 5650 that it would put bulls to test. There three EMAs, 50,100 and 200. And there after there is a trend line from November 2010. So bulls would be put to test in coming at-least two weeks we have to see whether bulls would be able to go pass the test or not and if they fail then it think this time the bears would be ruthless and would strifel the bulls and would not give time to rebound. So the next two to three weeks would be crucial for the markets movement in the coming months.
One of the noticing feature of the current week is that 50 day EMA has moved below 200 day EMA and is just about to move below the 100 day EMA, which is a bearish indication, in my earlier updates I have indicated that 100 day EMA has moved below 200 day EMA which is extreme bearish. Now 50 day EMA is below 100 day EMA and 100 day EMA is below 200 day EMA and all the three EMAs are moving down which is a very very bearish combination. So till this pattern is not reversed the upside potential of the market is limited. So keep this in mind.
Nifties’ opening of the week was dramatic and the close of the week was more dramatic and it fooled everybody on these two days. Nifty opened on a week note and it was gap down below the two year trend line giving an indication that bears might have finally caught hold of bulls and they would dominate, but bulls were able to defend the earlier bottom February 2011 and there after they were able to take the market up and on Friday virtually decimated bears and bears were made to run for shelter. The movement of the market on Friday has taken above the trend line of two years which it has broken on Monday. The movement above the trend line is an indication that the break down was not successful and bulls were successful in defending the same. The break of the trend line would indicate that weakness and it should not be over looked. Any break of the trend line for the second time in next few weeks then that would be disastrous. Now we have to see whether the movement on Friday was just a flash in the pan or a genuine movement. But technically it appears that it just a technical bounce back. There are so many hurdles which market has to clear before the strength of the bulls can believed. There are so many resistances at 5550 to 5650 that it would put bulls to test. There three EMAs, 50,100 and 200. And there after there is a trend line from November 2010. So bulls would be put to test in coming at-least two weeks we have to see whether bulls would be able to go pass the test or not and if they fail then it think this time the bears would be ruthless and would strifel the bulls and would not give time to rebound. So the next two to three weeks would be crucial for the markets movement in the coming months.
One of the noticing feature of the current week is that 50 day EMA has moved below 200 day EMA and is just about to move below the 100 day EMA, which is a bearish indication, in my earlier updates I have indicated that 100 day EMA has moved below 200 day EMA which is extreme bearish. Now 50 day EMA is below 100 day EMA and 100 day EMA is below 200 day EMA and all the three EMAs are moving down which is a very very bearish combination. So till this pattern is not reversed the upside potential of the market is limited. So keep this in mind.
Positive for the market:
· Weekly stochastic is in buy mode.
· Daily stochastic is in buy mode.
Negatives
· Nifty is trading below 15 day, 50 day, 100 day and 200 Day EMA.
· 100 day EMA has moved below 200 day EMA indicating extreme weakness.
· Daily and Weekly MACD has given a sell signal indicating weakness,
· Monthly MACD is in sell mode indicating weakness in the market.
· Daily stochastic oscillator is in sell mode
Elliott wave analysis:
In previous weeks I have indicated that we might be forming an expanding triangle and we are in formation of the fourth wave and after completion of the same we can see fifth wave developing which would take the market down very swiftly and it would be very violent and also the longest of all the waves. The longest wave till now is of length 1000 points so the fifth wave would be of at-least 1000 length so we have to prepare for the same or would be Fibonacci relations and generally 138.10% or 161.8% so if the pattern is confirmed then we have some amount of trouble coming into the market.
It appears that we might have completed wave-I of the wave -5 of the triangle is of length 450 points and it appears that we have completed in the wave-ii also. it also appear that we might have completed wave (I) and (ii) of wave-(3) of wave-5 which indicates that we might just begin wave-(iii) so we can see a swift movement on down side and which would be most distruptive. So we shall prepare for the same we might see very violent movement in the market in coming days or weeks so be prepared for the same.
Generally in Expanding triangle pattern the fifth wave goes near or below the trend line and the low the trend line is more frightening for bulls around 3800 levels really scary. Nearly 80-90% of the time it happens. So till it is proved other wise we can expect these levels. or till EW pattern is violated b movement above 4th wave.
The expanding triangle pattern as of now appears to be intact and the wave count has been reworked and indicated in the chart below. it appears that the pattern is breaking into complicated structure and it would go on to do the same in coming weeks. But the time for a drastical fall is being slightly delayed but it appears that ultimately we might see it till the wave structure is negated. As per the wave count the upside is limited to around 5600 levels not more. So watch out if the market again approaches 5600 levels.
It appears that we might have completed wave-I of the wave -5 of the triangle is of length 450 points and it appears that we have completed in the wave-ii also. it also appear that we might have completed wave (I) and (ii) of wave-(3) of wave-5 which indicates that we might just begin wave-(iii) so we can see a swift movement on down side and which would be most distruptive. So we shall prepare for the same we might see very violent movement in the market in coming days or weeks so be prepared for the same.
Generally in Expanding triangle pattern the fifth wave goes near or below the trend line and the low the trend line is more frightening for bulls around 3800 levels really scary. Nearly 80-90% of the time it happens. So till it is proved other wise we can expect these levels. or till EW pattern is violated b movement above 4th wave.
The expanding triangle pattern as of now appears to be intact and the wave count has been reworked and indicated in the chart below. it appears that the pattern is breaking into complicated structure and it would go on to do the same in coming weeks. But the time for a drastical fall is being slightly delayed but it appears that ultimately we might see it till the wave structure is negated. As per the wave count the upside is limited to around 5600 levels not more. So watch out if the market again approaches 5600 levels.
Wolf wave:
In my previous update, I have indicated nifty has formed a wolf wave and any close below 5700 on weekly basis would confirm the same, we are just near 5700 so if it is confirmed during the current week then we have all chances of taking the market below 5000 as per this so be prepared for the same once the same is confirmed. As nifty has closed below 5700 on weekly basis it appears that we are on our way to sub-5000 levels.
M.Sri Mahidar
Trend is Friend.
Sunday, June 26th 20.11 IST
I have indicated in my earlier update 100 day EMA has moved below the 200 day EMA and this is the most bearish indication. This bearish crossover has happened thrice in last 11 years first in year 2000 where market corrected nearly 90% of the total rise till that time, second time in 2004 when the market fell by heavily (actually it fell nearly 70% of the total rise till that time) and second one in june 2008 and in this case also market has fallen by 70% of the rise till then. Considering this can we expect the same this time also, history is pointing towards that so till this bearish crossover maintains we can expect a heavy fall in the market so better watch out.
