Weekly technical Analysis for week ended 25th December 2011.
I am writing this update after nearly three weeks as I was out of place on weekends and was not in a position to update on the technical updates. But nothing much seems to have happened technically as the market is at the same place where I have updated three weeks back. If any major technical event have happened I would have updated the same immediately. This during the last two weeks one of the powerful technical events have been taking place which seems all market participants have been ignoring. Nifty has once again moved below 200 week EMA which is a bearish signal for the market and indicates further down sides more violent ones cannot be ruled out till the time market stays below it. During the last five week it has been that nifty has closed below 200 week EMA thrice which itself indicates extreme weakness as the most powerful support level is not offering any credible support. As have indicated earlier also that during the last 11 years this is only the third time that nifty has moved below the 200 week EMA. And during the earlier two occasions once in year 2000 and also in year 2008 market have fallen very violently and that too markets have fallen by 25 to 30% from the level it broke below it. This time the break is at around 4800 level so the fall has to be nearly 25% from those levels which is hold your breath 1200 points giving us a target of at-least 3600 and chances of seeing 3300 of higher levels of corrections happen. You may be wondering what is the amount of correction after 200 week EMA was violated in 2000 the fall was 32% and in 2008 the fall was 40% so if this is taken into considering then we should be on our way to 3300 levels at-least. The fall may be very violent so be prepared for it.
From the month of august onwards market has been oscillating between 100 week EMA and 200 week EMA. It has made attempts twice to move above the 100 week EMA and failed in both the attempts and in each case of failure it moved down and moved down and in earlier two times it moved below 200 week EMA stayed below it for one week and then immediately moved above it. But this time for two consecutive weeks it closed below it which is a clear sign of strength of bears as they were successful in maintaining bulls below very important support level. So this is clearly a sign that they are bears and slowly coming into the market and one thing is sure they would not be out till a final blow out punch is given by then where bears would be decimated at-least for short period of time. 200 week EMA is at 4854 so if nifty goes near it is a clear opportunity to go short in the nifty with a stop loss at 15 week EMA. So it appears that we are heading for a final blow out punch by the bears.
Nifty is at near the levels where in an slight move downwards might put it into a catastrophic fall. It is at the same levels from where nifty started its very violent fall both preceding and post lehman Bros collapse it can be clearly seen in the chart. it is also at those levels where nifty opened at the gap up opening levels of may 2009 levels any breach of 4500 has all chances of hell breaking loose and bulls running for cover as we do-not have any credible support till 3200 levels. And we can see market falling very very swiftly on breach of 4500 as we would reach the zone of no support. So brace of for fall if 200 day EMA is not taken out in months to come.
I am writing this update after nearly three weeks as I was out of place on weekends and was not in a position to update on the technical updates. But nothing much seems to have happened technically as the market is at the same place where I have updated three weeks back. If any major technical event have happened I would have updated the same immediately. This during the last two weeks one of the powerful technical events have been taking place which seems all market participants have been ignoring. Nifty has once again moved below 200 week EMA which is a bearish signal for the market and indicates further down sides more violent ones cannot be ruled out till the time market stays below it. During the last five week it has been that nifty has closed below 200 week EMA thrice which itself indicates extreme weakness as the most powerful support level is not offering any credible support. As have indicated earlier also that during the last 11 years this is only the third time that nifty has moved below the 200 week EMA. And during the earlier two occasions once in year 2000 and also in year 2008 market have fallen very violently and that too markets have fallen by 25 to 30% from the level it broke below it. This time the break is at around 4800 level so the fall has to be nearly 25% from those levels which is hold your breath 1200 points giving us a target of at-least 3600 and chances of seeing 3300 of higher levels of corrections happen. You may be wondering what is the amount of correction after 200 week EMA was violated in 2000 the fall was 32% and in 2008 the fall was 40% so if this is taken into considering then we should be on our way to 3300 levels at-least. The fall may be very violent so be prepared for it.
From the month of august onwards market has been oscillating between 100 week EMA and 200 week EMA. It has made attempts twice to move above the 100 week EMA and failed in both the attempts and in each case of failure it moved down and moved down and in earlier two times it moved below 200 week EMA stayed below it for one week and then immediately moved above it. But this time for two consecutive weeks it closed below it which is a clear sign of strength of bears as they were successful in maintaining bulls below very important support level. So this is clearly a sign that they are bears and slowly coming into the market and one thing is sure they would not be out till a final blow out punch is given by then where bears would be decimated at-least for short period of time. 200 week EMA is at 4854 so if nifty goes near it is a clear opportunity to go short in the nifty with a stop loss at 15 week EMA. So it appears that we are heading for a final blow out punch by the bears.
Nifty is at near the levels where in an slight move downwards might put it into a catastrophic fall. It is at the same levels from where nifty started its very violent fall both preceding and post lehman Bros collapse it can be clearly seen in the chart. it is also at those levels where nifty opened at the gap up opening levels of may 2009 levels any breach of 4500 has all chances of hell breaking loose and bulls running for cover as we do-not have any credible support till 3200 levels. And we can see market falling very very swiftly on breach of 4500 as we would reach the zone of no support. So brace of for fall if 200 day EMA is not taken out in months to come.
it can be seen in the above chart that we are near the region of no support which is clearly shown with brown circles any break of the same would result in a very very big fall. So bull be cautious.
Positive for the market:
• Daily stochastic is in buy mode indicating that we might see a short up move.
Negatives
• Market is finding resistance at 200 day EMA.
• 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
• Daily and weekly MACD has a given a sell signal.
• Weekly Stochastic is in a sell mode.
• Monthly MACD is in sell mode indicating weakness in the market.
• 15 week EMA is below 50 week and 100 week EMA.
M. Sri Mahidar
Trend is Friend.
Monday, December 26th 22.32 IST
