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
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.
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
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