Weekly technical Analysis for week ended 27th August 2011.
Ho Ho Ho how many times Elliott wave tells where the market is headed in case of uncertainties. This time also it was indicating from last five to six months that we are in for a bad market and you can see now where you are headed. I have been indicating from last so many months that we are in for a very very bad market as the pattern formation as per the Elliott wave was painting a bearish picture. I was giving a minimum target of around 4700 levels from last five to six months and you see what we have achieved we are virtually near the target. Mind you it is the minimum target and the maximums would be more bearish. All along the last six months many of you might be thinking that i am a bear and that why I am giving those bearish targets. But ultimately price speaks. All around the news channels or media everybody was telling that first we might not go below 5200 and then in any case it would not go below 5000 and you see the final result. That’s where the Elliott wave helps it gives a clear picture when there choes in the market and this time also it did not disappoint me or anybody. Then why I have stuck to the pattern, even though sometimes market was trying to indicate otherwise, because the reversal patterns or the negation of the pattern was not indicated. As per elliotte till its proven otherwise we should stick to the original pattern, with amendments along as the price move and if the pattern changes then just change accordingly and don’t argue. And this time also it did not deceive me.
The movement of nifty during the week is indicating an extremely weakness for the market. This week market has done one of the very bearish patterns. It has moved and close below 200 week EMA on weekly charts, which is a very bearish indication. In the last two decades market has moved below 200 week EMA only three times earlier and this time its fourth time it has done. And in the earlier three times it whenever it has moved below 200 week EMA market has fell by at least 20% from those levels and we have to see whether it would be different this time. If you go by the history then we have to fall by 20% from these levels. Means nearly 1000 points from these levels it frightening if you consider at this point of time but target might be achieved. One positive point for short time, except in 2008, in earlier two occasion nifty has immediately bounced back and then it has collapsed. Whether this would happen this time also. In the coming week, we have to see market recovering and closing above the 200 week EMA otherwise the next month would be disastrous for the market and it has all chances of collapsing from current levels. So at-least this time hope for the best.

Positive for the market:
RSI is in oversold position.

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.
• Nifty has moved below 200 week EMA.
• Daily and weekly MACD is in sell mode,
• Daily and weekly stochastic is in sell mode.
• Monthly MACD is in sell mode indicating weakness in the market.

Elliotte 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. So now we are near the target so Elliott wave has again played its part.
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. The latest wave count is give below 
The updated wave structure is given in the chart below. There are three options, so I have given the three wave counts in different colors. I would explain it in detail in the coming week. The breakup of waves is indicating the we are in for very bad days in coming weeks or months. So brace for it.

M.Sri Mahidar
Trend is Friend.
Sunday, August 28th 19.53 IST

nifty weekly update

Weekly technical Analysis for week ended 14th August 2011.

WISH YOU ALL A HAPPY INDEPENDENCE DAY

Nifty opened this week with a gap down and also the following day with a gap and there after recovered in next two days to be sold off on Friday. During the week market formed a star as per candle and stick parlace. The pattern indicates a fierce battled between bulls and bears and finally not movement either way and we have long upper tail and also lower tail which indicates that bears tried to take the market down but bulls made sure that market does not stay at the lower levels and take the market up and bears makes sure that market does not stay at higher levels push the market down result no direction for the market. Now the coming weeks would tell which way the market would be taken. As this pattern has formed while falling it clearly indicates that it’s a pause in a fall and after some time market has all chances of eventually moving down but wait for market to confirm. One of the negative features of the last week is that bears were successful in making market closing below 5200 which is a bearish signal. Over a period of last six months market has been finding support at 5200 and this week market has successfully broken below it and during the entire week it failed to move above it which is a very weak sign. On the noticing features of market during the week is that market even though opened below 5000 on Tuesday but immediately recovered and closed above and was able to maintain above it indicates that bulls have successfully defended psychological level of 5000 and any breach of the same this week or coming weeks would take the market further below. Now we have to wait for the market to close below 5000 first on daily basis and second on weekly basis to indicate further weakness.
Positive for the market:
Market has defended 5000 level.
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 and weekly MACD is in sell mode,
· Daily and weekly stochastic is in sell mode.
· Monthly MACD is in sell mode indicating weakness in the market.

This week I would be explaining the market as per point and figure charting. This I have explained long back and now I would be furnishing P&F as there happened an important event as per this and it’s a very bearish pattern. That is the reason for me to present here the P&F charts. Point and figure shows only demand and supply and it does not take into any oscillators so it is the best indicator of trend reversal. When supply increases it reverses from bull to bear market and when demand increases it indicates reversal for market from bear to bull market.
The point and figure chart is given below, the chart is of weekly basis.

The one indicated by big blue circle is a pattern know as triple bottom break down formation. This is a the power trend reversal indication. And also see that nifty has broken the trend line (blue line of last three years in June 2011 and failed to move above it in July and august. It may be noted that in point and figure charting trend line is drawn at an angle of 45 degrees from the low of the market in a raising market and not joining all the bottoms so the break of trend line in P&F is the most powerful reversal indication rather than in traditional method where trend line is drawn joining previous lows. You can see in the above chart that from 2008 onwards the trend line was not broken or even touched but in June 2011 is successfully broken the same. but if you have see in the traditional method it has broken number of times. So the break of the trend line followed by triple bottom break down formation is a power full reversal indication and it clearly indicates that selling pressure has taken over the market and surely further down sides are not ruled out. one of the noticing feature of P&F figure patterns is that it also gives the probable target for the break down and in the present case the target is 1500 points from 5700 levels so the target comes to around 4200 levels. it seems to be distant now but if the red trend line in the chart is not take out successfully in coming months then we have all the possible chances of achieving the target.
You can also see the small blue circle which is drawn at the 2009 bottom at the right hand bottom of the chart . Notice nifty has formed similar pattern and triple top break out formation has happened in march 2009 and you know what has happened to the market after that. I have given this to give you an idea about how powerful the pattern is. This time triple bottom break down has happened and till reversal of the same happens the selling pressure happened and till buying pressure emerges and market moves above 5700-5800 levels.
Elliotte 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 J
Updated wave count is give below:

It appears that as we are in the fifth wave for the expanding triangle formation. And we are in the third wave of the fifth wave formation. It appears that we might see the fifth of the fifth wave to be extended and if that happens then the pace of fall would increase once we start the fifth wave. As per the updated wave pattern it appears that we might have completed the fourth wave of the third of the fifth wav and we might have all chances of the fifty wave of the third may move below the low of the three. So we have all chances of seeing sub-5000 levels in coming weeks. So brace for it.
M.Sri Mahidar
Trend is Friend.
Sunday, August 14th 20.26 IST

nifty weekly technical update.

Weekly technical Analysis for week ended 6th July 2011.
This week nifty opened on a slightly strong note and there after tried to recover the gap down opening of previous week and it failed to achieve the same and there after started to correct on a heavy note and it closed below 5400 which was very important psychological level and there after continued to slide and Friday was the “D” day and it opened with a huge gap down nearly 120 points and there after moved below the 5200 mark which was also a very psychological levels for market participants, and it closed above it. But as of now 5200 has lost it advantage and it has not shifted to 5400 and the close below 5400 has confirmed the down ward trend. One of the noticing features of the current fall are being furnished below
i. Nifty have made 52 week low on closing basis and also intraday basis for the first time after October 2008 on the day of the trading, which clearly indicates that weakness for the market and which also gives an indication that further down sides are not ruled out in the coming months as generally when 52 week low is made after long time the trend continues for some time before reversal happens. So brace up for further down sides in coming months.
ii. Nifty has failed to move above the 200 day EMA thrice in last two months and then collapsed indicating that bulls are not strong and bears were successful in defending the territory.
iii. Nifty has broken below the two years trend line at the first day of the week and there after started to move down. The break of the two year trend line is a clear indicating that we are in for trouble and we can easily move down very very violently. So brace up for the same till the reversal is indicated by charts.
iv. Nifty also seems to have formed a Heads and Shoulders pattern over a period of last two years. and this year it has broken below the neck line and have moved down with heavy volumes which is a clear indication that it has confirmed the same. The targets for the same are very very bearish and are given below in the following paragraphs after these points.
v. Elliott wave is also painting a very bearish picture. It has been doing for some time and it appears that price has not started to be confirming the same. The Elliott wave is not pointing towards a very bearish picture and the targets for the same are being given in the elliotte wave analysis below

Last week I have indicated that we are on the verge of break of the neck line of the heads and shoulders pattern. this week it has broken the trend line and also closed on weekly basis below it for the first time in last two years. The close below it is a clear indication of weakness in the market in the coming months. Till the neck line is conquered by bulls the targets of the H&S cannot be ruled out. Now you might be wondering what the target would be. As per the H&S pattern the target would be arrived at by the height of the head and in the preset case is around 1400 points so the target for the same comes to around 4000 for nifty. So brace for it. it now appears to be improbable but if the neck line is not conquered then we can expect the target to be achieved.

Positive for the market:
Nil
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 and weekly MACD is in sell mode,
· Daily and weekly stochastic is in sell mode.
· Monthly MACD is in sell mode indicating weakness in the market.
The above is indicating an extreme bearishness in the market . one of the noticing features of the current fall is that all the oscillators are have just give a sell signal and they are also not in oversold levels which is clearly indicating that further down sides are not ruled out.
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 J
Updated wave count is give below:

The target for the expanding triangle now appears to be around 3700 levels which also happens to be 61.8% retracement level of the entire rise from march 2009. So will we achieve the target Elliott wave says so. I have been giving this target for some months now. Till the market proves other wise the target would be achieved eventually. There is 80% probability of achieving the target. So brace up for the bear market in coming months or till the price confirms the reversal of the trend.
M.Sri Mahidar
Trend is Friend.
Sunday, August 7th 15.00 IST

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