Weekly technical Analysis for week ended 7^th April 2012.

I am writing this update after nearly three weeks of absence. First of all I would like to say sorry for that. As I was travelling extensively on weekends I was not in a position to update on the same. But have been following the market closely. Technically nothing major change has happened. Now we would come to the market. This has been the truncated week for the market so nothing much seems to have happened during the week. During the previous weeks the market has taken support exactly at 200 day EMA, nifty moved below the 200 day EMA and thereafter moved above it which is a clear sign that long only investors (long term investors) are staying in the market and as providing support to the market. Till market is above it we can safely assume that bulls are strong and all the down side moves are bought into and falls would be shorter and the rise would be faster and would be longer than that of fall. So technically we should see for buying opportunity rather that the reverse. There seems to be nothing much change in the elliotte wave structure which I would discuss at the relevant section. Technically both daily and weekly charts are showing strength and I may not be surprised if the market moves up surprising everybody. One of the positive thing about the current down move is that it is on low volumes and also the re-tracement has taken more time which is clearly indicating that bulls are supporting the market and at present they are not surrendering to the bears. So till the situation reverses we can expect a decent up move. Also the weekly MACD is in buy mode and also the Daily MACD has give a buy signal which is a clear signal we have all chances of marching upwards from here. it may also be noted that nifty has exactly taken support at the sloping trend line which it has broken in January 2012 it is indicated in the chart below. And also the weekly chart also is showing some bullish sentiment. There is convergence of EMAs,50,100 and 15 week EMA. So we can see market moving in one direction in a big way when EMA diverge and the movement would be in the direction of divergence of EMA. So we have to closely watch the same.

it can be seen from the above chart that nifty has taken exactly support at the sloping trend line(red color) drawn from the high of November 2010. The point of contact is indicated by the blue elliptical figure.

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.

· Daily MACD has given a buy signal.

· Daily stochastic oscillator is in buy mode but is at around overbought levels.

· Weekly stochastic oscillator has give a buy signal

· One of the big positive signal which has been generated is 50 week EMA has moved above 100 week EMA and also 15 week EMA has moved above all the three.

Negatives

· Monthly MACD is in sell mode indicating weakness in the market.

it can be seen from the above that the positive signs are slowely coming So the market would surprise us? We have to wait and see.

Elliott wave analysis:

I have indicated few weeks back that we might be in formation of an expanding triangle as a second was of the “C” wave of a flat. And it seems that the 5^th wave of the expanding triangle still seems not to be over and we can expect it moving up again. It seems that the fourth wave of the 5^th wave of the triangle is complete and we might have started the 5^th wave which has chances of moving near the 5600 levels. so we have to see whether market responds accordingly or not. the updated elliotte wave structure is given below in the chart.

M. Sri Mahidar

Trend is Friend

Celebrate Life

Saturday, April 7^th 11.27 IST