Nifty Weekly Update

Weekly technical Analysis for week ended 30th July 2011.
During the week nifty opened on a strong note moved up towards 5700 levels and immediately on next day it moved below that level and moved down swiftly down wards on volumes indicating weakness in the market. In the beginning of July also the market has moved above 5700 and thereafter immediately next day it moved down towards 5500 and this time it has moved below 5500 and not placed at 5482 thus forming a lower low for the first time after June 2011 indicating that bears were successful in taking the market down. Another point to be noted is that nifty is flirting the 200 day EMA. From the month of march onwards nifty is moving above 200 day EMA and there after it moved down and closes below it, but during the last two times it reversed immediately after moving above 200 day EMA. This time also nifty has moved above 200 day EMA and immediately moved below it that too with gap down indicating weakness in the market. Now the question comes what does it indicate when market sell below 200 day EMA, traditionally it is believed that bulls rule above 200 day EMA and bears below it, it implies that bulls are not supporting the market and then are not prepared to buy above it which clearly indicates that bull are not optimistic about the market and it clearly indicates that bears are going to have field day. Generally above 200 day EMA long/medium term funds would be in the market and below it they sell into the market or get out of the market. So as of now it appears that we might be heading down wards unless and otherwise the market proves other wise. so when the market would prove other wise, firstly any moved preferably closing above the sloping trend line drawn from November 2010 high and secondly close above 5750 and preferably above 5950. So till that time bears would be ruling the market.
For the coming week/month, the market has all the chances of giving a clear direction and we might move in that direction of break out in a big way. During the last two to three months nifty is stuck between 5200 and 5700 and during the last month it is stuck between 5400 to 5700. The narrowing of the market is a good indicating as it indicates that market would eventually has to give break out and the narrower the band becomes the larger would be the break out whatever the direction is. Now the question that might come to your mind is in which direction be the break out, as the market is refusing to go above the 200 day EMA it appears that there are all the possibility of market breaking on the down side, but don’t take is for granted we have to wait for the price to confirm and them follow the trend time.
Another thing which is very important for the coming weeks is that nifty is again near the two year trend line which is indicated in the chart below. It can be seen from the chart below that nifty has been taking support at that trend line will it take support this time also? Only time would tell the difference. One difference during the last two years is that previously whenever the market has taken support at the trend line it has moved above and made a new 52 week high, but from November 2010 onwards the scenario has changed, whenever it has taken support at the trend line it moved up but did not make a 52 week high but made a low high and this thing is continuing till now this time also it has made a lower high. As the trend line is sloping up still market is forming higher lows on the down side and lower tops on the upper side this is clearly pointing that the range is narrowing and as lower tops are forming it is clearly indicating that we may be in for forming of lower low for the first time after so months. So be prepared for it. Another point to be noted is that during the previous time when ever the market was near the trend line MACD as nearly the oversold and has give a buy signal but this time there is a difference MACD has give a sell signal on daily charts so it is also pointing towards break of trend line. What ever may be the case wait for the price to confirm and then only jump.

Positive for the market:
· Weekly MACD has given a buy indication.
· Monthly stochastic is in buy mode and is about to give a sell signal.
Negatives
· Nifty is trading below 15 day, 50 day, 100 day and 200 Day EMA.
· 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
· Daily MACD is in sell mode,
· Daily and weekly stochastic is in buy mode.
· Monthly MACD is in sell mode indicating weakness in the market.

Elliott wave analysis:
In previous weeks I have indicated that we might be forming an expanding triangle and it appears that we might have completed fourth wave and it appears that we have started the fifth wave and it appears as per the current wave structure and we might have completed the 1st wave of the fifth wave and it appears that we might have completed 2nd wave of the 5th wave and it seems that we might has started the 3rd wave of the 5th wave and generally the 3rd wave would be most violent and devastating and the longest, which is being indicated by gap down opening. The first wave of the 5th wave was around 750 points and the second wave was nearly 61.8% of the first wave and wave would normally be at-least 161.8% of the first wave so we have chances of correcting around 1250 points from the end of the second wave of the 5th wave which happens to be around 5700 levels giving us a target of 4500(o no) we might doubt this target but if the pattern is correct then we have all chance of correcting. The this pattern is pointing towards a very weak picture. So we have to wait till the pattern is negated till then we can hope the targets to be achieved.
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 otherwise we can expect these levels. or till EW pattern is violated b movement above 4th wave. The latest wave count is give below

M.Sri Mahidar

Trend is Friend.
Sunday, July 31st 22.11 IST

nifty update

nifty weekly update

Weekly technical Analysis for week ended 16th July 2011.
I am writing this update after one week gap. During this period there seems to be significant events which I would discuss first and come to the current weeks movements. For the week ended 9th July indicated both strength and weakness, strength is indicated by movement above 5700 and close above it on 7th July and gave some hope for bulls but immediately on next day it opened slightly up moved up and late in the day has collapsed and nearly retraced all the gains of the earlier day, it retraced nearly ¾ of the earlier days rise giving a very bearish pattern as per candle and stick pattern i.e. Dark Cloud Cover(DCC). DCC is a very bearish pattern and it does not require any confirmation also, till the high of 8th is taken out the trend can be assumed to be down. So till 5740 is taken out we can assume the trend can be down as per DCC, so keep a close watch 5740. During the current week nifty opened on a weak note and on Tuesday there was a gap down opening and there after it started to continually move up and by the end of the week it moved above the gap but the close was below the gap, but the weekly candle was a red candle indicating strength for the bulls. The weekly candle was that of a hammer indicating strength of the bulls but the colour was not green which is negating the patterns implications. The market seems to be in a no trade zone and it is even puzzling the market men, one day it shows strength and other day it gives extreme weakness and vice versa. So trend is still side ways. So you might be wondering when the trend would be indicated. The uptrend would be confirmed only when there is a weekly close above 5950 levels and down trend would be confirmed when the two years trend line is taken out, this trend line appears to be at around 5450-5400 levels. Any weekly close below 5400 would be disastrous for the bulls and bears would celebrate as it would pave way for sub-5000 levels but there is in between support at 5200 levels. so any move on either sides would confirm the trend. So 5950 and 5400 are the two crucial levels to confirm the trend and any break on either side would confirm the trend.
One point to be noted is that nifty id exactly at 200 day EMA we have to see whether the same would offer support or not would be know in the current week. As of now 50 day EMA is below 200 and 100 day EMA and 100 day EMA is below 200 day EMA which is a bearish set up and till the pattern exists the bears would be happy as there are all chances of market moving down. So the pattern has to be closed watched.

Positive for the market:
· Nifty is trading above 15 day, 50 day, 100 day and 200 Day EMA.
· Weekly MACD has given a buy indication.
· Daily and weekly stochastic is in buy mode.
· Monthly stochastic is in buy mode and is about to give a sell signal.

Negatives
· 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
· Daily MACD is in sell mode,
· Monthly MACD is in sell mode indicating weakness in the market.

Elliott wave analysis:

In previous weeks I have indicated that we might be forming an expanding triangle and it appears that we might have completed fourth wave and it appears that we have started the fifth wave and it appears as per the current wave structure and we might have completed the 1st wave of the fifth wave and it appears that we might be in final stages of completion of the 2nd wave of the 5th wave and after which we might start the 3rd wave of the 5th wave and generally the 3rd wave would be most violent and devastating and the longest. The first wave of the 5th wave was around 750 points and the second wave was nearly 61.8% of the first wave and wave would normally be at-least 161.8% of the first wave so we have chances of correcting around 1250 points from the end of the second wave of the 5th wave. The this pattern is pointing towards a very weak picture. So we have to wait till the pattern is negated till then we can hope the targets to be achieved.
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.

M.Sri Mahidar
Trend is Friend.
Sunday, July 17th 19.32 IST

Weekly technical Analysis for week ended 2nd July 2011.
Bulls have started from where they left at the end of the last week. Bulls were dominating during the entire week except for Friday where bulls were dominating at the opening and after that bears took control. All the movement of the week was a clear indication of the bulls, bulls and nothing other than bulls and on Friday the bears have shown their strength. You might be thinking that I might be a perennial bear and that’s why I may be supporting the bears but its not the case I would write only that which the price action says or charts say. As far as technicals are considered on Friday is a very bearish movement and if in next two days if market does not move above Fridays high then we might be in for a trouble. You might be wondering what the pattern is? The nifty has opened on Friday with a gap up opening of nearly 60 points and there after started to moved down and corrected all the gap and also all of previous days rise and it nearly moved below the previous days low and closed at the more that 50% of the previous days close indicating a very bearish signal. This is know as dark cloud cover in candle and stick parlance and which is a very bearish reversal pattern. Till the high of the day is taken out the implications of the pattern exists and it indicate that bulls might be in for a trouble in the coming days or weeks. So better be carefull with longs. So if the high of Friday is not taken out in first two days we can see a healthy fall in coming days or week. If the last weeks low is take out then we have all chances of retracing majority of the fall.
But there are two to three events that have happened during the week which would give some cheer to the bulls. Nifty have moved above the 100 and 200 day EMA with ease. The ease at which it has moved above these EMAs should given some comfort to long term bulls. Now what is required is to see whether these offer support or not. Another thing to watch out is whether nifty would sustain above these EMAs in coming one to two weeks. If it does not happen the we might be in for a trouble for bulls. So watch out as the next two weeks are clearly going to give a clear picture of the direction of the market. So keep your fingers crossed. In the coming week bulls would make all attempts to maintain their supremacy over these EMAs and bears would try to break their baston. So its going to be interesting two coming weeks. So better be prepared for a roller coaster ride. Another thing to be noted is that 50 day EMA is below 100 day EMA which is again below 200 day EMA and all these three are moving down which is not good for bulls. Any move below 5500 would negate the strength indicated by this weeks movement as that would take below 100 and 200 day EMA. so
Another thing to be noted is that on weekly charts nifty is finding resistance at 50 week EMA. it exactly touched 50 week EMA and then started to moved down which is not a good sign for bulls. So till this is taken out the bears would be having an upper hand so better watch out.
Positive for the market:
· Nifty is trading above 15 day, 50 day, 100 day and 200 Day EMA.
· Weekly stochastic is in buy mode.
· Daily MACD is in buy mode.
Negatives
· 100 day EMA is below 200 day EMA indicating extreme weakness.
· Weekly MACD is in sell mode,
· 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.
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 it appears that we have completed wave-1 of the wave-5 of the expanding triangle and we are in formation of wave-2 after which wave-3 would commence which would be disastrous for the market. As per this wave count we have all chances of moving above 5600 level. Whether we have completed the wave-2 of the wave-5 if so we might see a swift movement downward in the market will that happen we have to wait and see.

M.Sri Mahidar
Trend is Friend.
Sunday, July 3rd 20.19 IST