Weekly technical Analysis for week ended 3rd March 2012.

Monday market opened with a scary mode falling a vertical fall and driving all the bulls away and from there on the next day reversal happened and market moved up but during the whole week it stayed in the range of the first day bar and it stayed below the low of the last week which is clearly indicating that the bears were having upper hand and they were successful in maintaining the market down. But bears bulls made their presence but they were not able to take the market up. So technically the bears are active now and we have to accept that. So in the coming weeks we can see the market with some down ward bias. During the week nifty has moved below the 15 day EMA which is also a sign on weakness at least for the short time. It may be also noted that during the week 5 day EMA has moved below the 15 day EMA which is also indication that market is weak at least for the short term. So till nifty moves above the 15 day EMA the bears would have upper hand and if it moves above it the bulls. So act accordingly.
Another one thing which has to be noted or seems to be ignored, I have indicated long back in October 2011 that we have broken the neck line of the heads and shoulders and have moved down for two months and there after recovered in January and we are all the way near the neck line and then we have started to move down so whether we have perfectly completed H&S pattern? Only time would tell the same so till the neck line is taken out we can only say that the market has all the chances of moving down. The same is indicated in the chart below by way of a blue circle.

 

Generally when market reverses after touching the H&S pattern neck line after the break of the same the fall would be more violent than that of the break of the neck line. So would the market fall very violently now or would again make an attempt to move above the neck line. We have the wait and see. One thing is sure if the neck line is not taken out we can surely expect the market to fall very very violently taking the market participants surprise. So keep a close watch on the neck line.

Now we have to see what the Elliott wave has to in store for us which is indicated in the relevant section.

Positive for the market:
• Nifty is above 200 day EMA
• Market is above 200 week EMA.
• 50 day EMA has moved above 100 day EMA which is a bullish signal
• Weekly MACD has give a buy signal indicating that we might see up move to continue for some time. it can only be reversed abruptly only when market falls heavily.
Negatives
• 5 day EMA has moved below 15 day EMA and nifty is below 15 day EMA.
• Daily MACD has given a sell signal
• Daily stochastic oscillator is in sell mode and moving down indicating weakness in market.
• Weekly stochastic oscillator has give a sell signal and moving down indicating that we have chances of seeing the market down.
• Monthly MACD is in sell mode indicating weakness in the market.
• 15 week EMA is below 50 week and 100 week EMA.
It can be seen from the above there is absolute balance between positives and negatives so it clearly says that there is a fight between bulls and bears and who ever wins the market would move in that direction in a big way.

Elliotte wave Analysis:

Last week I have indicated that we are forming an expanding triangle as the wave-II and after which we might see the third wave developing. I have also indicated that we are in the fifth wave of the expanding triangle and after the end of the wave-5 of the triangle we would also complete the wave –II and we can see the market developing a wave-III which has all chances of taking the market to a new low. As of now for me the wave structure appears to be like this and I have to see whether any alternative exists or not. Which I still am not able to identify.  

I have given two alternatives for the fifth wave of the triangle and the alternative –I is given in red colour which is indicating the we might have completed the five wave up move of the fifith wave of the triangle and in this case the market should head down. But in the alternative –II we are in the fourth wave and after which market might move up probably towards 5600 with negative divergence and then has all chances of tanking. So what would happen only time would tell and we have to patiently wait for the market to indicate the same.

M. Sri Mahidar
Trend is Friend
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Sunday, March 4th 20.50 IST