Nifty Weekly

Weekly technical Analysis for week ended 15th October 2011.
This week nifty movement is indicating some strength and we cannot ignore the same. Whatever may be our technical interpretations, the market is showing strength and we have to believe it till it shows/indicates weakness. We have been discussing from so many weeks that nifty is stuck in range of 5200 to 4700 and every time when it goes near 4700 it bounces towards 5200 and whenever it moves nears 5200 it again falls to 4700. So I have been indicating that till this range is taken out we have to trade this range. This time it is again nearing 5200 and coming week we might see nifty attempting to cross 5200 we have to see whether the same would be conquered or selling pressure would emerge again or not. But this time it appears that we might see nifty moving above 5200. Elliott wave is clearly indicated when it took support at 4700 and the same appears to be coming true. The elliotte wave details would be given in the relevant section. One of the noticing feature of the current move is that nifty has bounced from the 200 week EMA which is a indication of strength of the bulls. I have indicated in my earlier updates that 200 day EMA is the last line of defense for the bulls and it appears that bulls were able to defend the territory. Bouncing from the 200 EMA is bullishness for the market. As nifty has bounced from the 200 day EMA the next resistance appears to be at 100 week EMA which happens to be at 5252. So this is the level which has to be watched. Nifty has been founding support at 200 week EMA and resistance at 100 week EMA for lat two and half months. So 100 week EMA is going to offer healthy resistance this time also. So as of instead of 5200, 5250 is going to be healthy resistance level. So this is the level to be watched for. Generally market goes above the resistance level, gives an impression that resistance is taken out and bullishness has come into the market and then market plunges we have to see whether this time also the same happens or not. If 100 week EMA is taken out it might find resistance at 50 week EMA. So we are entering in the territory of resistance levels. And the coming weeks are going to be testing time for the bulls and we might find resistance at each and every level. One of the noticing feature of the last weeks movement is that the volumes are less on the green candle days and more on the red candle days and during the last week each subsequent day the volumes were less than that of the previous days which would be concern for bulls. One of the noticing features is that weekly MACD is on the verge of giving buy signal which becomes a bullish signal we have to see whether the same would materialize or not.
The chart below is clearly indicating the resistance and support levels for the nifty. The double headed arrow is indicating the 200 week EMA and 100 week EMA on either sides and we can clearly see the resistance and support levels. And also not the two important things in that chart one is indicated by blue arrow is at 5200 which is the level which was taken out in august and that would offer resistance as of now. And if it is taken out then we have resistance at blue line indicated by red arrow. This is nearly two years resistance level and also neck line of the break down from the H&S pattern which break down has happened in august 2011. So till all these resistance levels are taken out bulls cannot be comfortable.
 

Positive for the market:
• Nifty has exactly taken support at 200 week EMA.
• nifty has just moved above 15 week EMA.
• Nifty has moved above 50 day EMA and is approaching 100 day EMA.
• Daily MACD is in buy signal.
• Daily and weekly stochastic is in buy mode.
Negatives
• Nifty is trading below 100 day and 200 Day EMA.
• 50 day EMA is below 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.
• 15 week EMA is below 50 week and 100 week EMA.
 
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 and we have nearly achieved the same. But still nifty has to violate till then it would hold good.
It appears that we might have completed the third wave of the fifth wave and we might have just started the fourth wave up and which should move above 5200 to confirm the same, that is why I have said earlier that we might see nifty moving above 5200 giving a false break out and then collapsing. Once the fourth wave is completed we might start the fifth wave which should be devastating wave. Generally the fifth wave of the expanding triangle should be the most devastating and we might enter into the fifth of the firth in the coming weeks which would plunge the market to sub 4500 levels probably sub 4000 levels. So be prepared for the same.
Another alternative which can be derived as of now is that, we might still be completing the fourth of the third wave of the fifth wave. The fourth of the third wave of the fifth wave might be forming a flat and in which case market might start the fifth wave of the third of the fifth which has chances of taking nifty towards or below 4700 levels and after that once again nifty has all chances of attempting 5200 again and then plunge. So not the wave structure is becoming complicated so would give sleepless night for the Elliott wave analysts.

M.Sri Mahidar
Trend is Friend.
Saturday, October 15th 23.21 IST

nifty Weekly Technical update

Weekly technical Analysis for week ended 1st October 2011.
This week the market is of mixed trend, but it still showing a weakness and it appears that bears are active even during the current week also as out of five trading days three days were bear candle days even though nifty closed with a positive candle. This clearly indicates that the closes were lower that the opens, thus indicting that the close were at the lows of the days. This week nifty opened on a weak note with gap down and there after recovered and moved up and moved above the psychological level of 5000 and on Friday even though it moved above 5000 it again collapsed down to close below 5000 second week in a row. There are so many things which are happening during the week technically and every thing is pointing out that bears are slowly and steadily becoming active and it appears that we are nearing days when capitulation is going to take place in near future where bears would just demolish bulls. Till now at every stage the bulls are coming back and trying to take market up and failing and the time/day would come were they would completely surrender to bears and we might see some vertical falls in coming weeks or months. One thing is sure that until the capitulation takes place the market is not going to turn up. I have seen in my short technical career that till there is a vertical fall( which generally is the last stage of the fall) there bear market is not going to end. So we have to wait patiently till the vertical 90% fall happens till then the market would be drifting slowly downwards. Now we come to the technical features which have occurred. One of the powerful thing is that 50 week EMA has moved below 100 week EMA which is a very bearish indication. this even has happened for the first time after may 2009 which itself is an indication of weakness. I would explain the thing in details which clearly gives the bullish and bearishness in the market. The 15 week EMA moved above 100 week EMA in 2003 and it maintained above it for till September 2008( it was in bullish mode till 5 years) when it moved below 100 week EMA and there after market collapsed you know that its still fresh in our memories. And one this which is to be noted is that this time also it moved below 100 week EMA in September only so will there be any co-incidence this time also, if that happens then we are in for a big big fall this month which happens to be in October. Another thing to be noted that in 2008 Diwali was in October that too on October 28th and just before diwali the market tanked and made low on a day before diwali. This time also diwali is on 26th so will history repeat itself. Wait and watch. It has been seen that in October is the month where if it’s a bull market the market just races up and if its bear market the markets just tank. So we have just entered into October and we seem to be in a bear market so will we see a good and healthy fall in the market and form a bottom. Just wait and watch And another thing is that nifty again moved below the 200 week EMA during week and there after recovered and closed above it. 200 week EMA is at 4838 and any move below it would signal bearishness in the market. So now 4838 is the level to be closely to be watched. So keep your fingers crossed, and patiently wait as we may get good prices which can be lower that the prices as of not at-least 30-40% lower than the current levels.

It can be seen in the below chart the movement of the 15 week EMA below 100 week EMA by a red circle. This event has happened for the first time after nearly 27 months indicating weakness. 

Positive for the market:
• Nifty has exactly taken support at 200 week EMA.
• Daily MACD is in buy signal.
Negatives
• Nifty is trading below, 50 day, 100 day and 200 Day EMA.
• 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
• 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.
• 15 week EMA is below 50 week and 100 week EMA.
Elliotte wave analysis: nothing much has happened as EW during the week to change any thing so it remains same as it is.

M.Sri Mahidar
Trend is Friend.
Sunday, October 2nd 19.26 IST