last week i have written the weekly update but did not post in blog which i am posting now.
Weekly technical Analysis for week ended 23^rd   September 2012.

i am writing this update after a long time nearly two months, during these periods the market was boring in a tight range with sectors only moving up, I also took some time off from the market but following the indices closely till something remarkable happens and now so many thing have happened both technically and fundamentally during the last one week to 10 days which has prompted me to update my weekly update and look into the market in detail. I would be now continually updating about the market.

Now we see what the market has done, during the last 10 days bulls have virtually decimated the bears and suddenly from no where immense optimism has come to the market and now everybody seems to be talking about the market and its movement. So what the charts are indicating technically. Although I have been bearish on the market for more than one and half years, I respect price and if its moving up then what ever may be your study you should just follow it as that would only lead you to success in the market. in the current situation the market is bent on moving up and we should respect that sentiment and act accordingly rather that going against the trend.

On a weekly charts it has been an fantastic range stuck between 200 day MA and 100 day MA. Market has been finding support at the 200 day MA around around 4700-800 levels and resistance at around 5400 levels which happens to be 100 day MA. The market has been stuck between these two for nearly one year  and this week it was successfully able to move out of the range on the upside on the basis of positive news at both global level and also domestic levels. This range I have indicated long back and also have indicated that once this range is taken out then we can see market move on larger scale the side of the break. This time the break has upper side and bulls have won the race and now as the break out has happen for bulls now bulls should take the market up if they show any weakness then bears would pounce and it would be end game for bulls. Now we can hope the market moves on the upsides.  If it fails and to move and again moves into the range of last one year then it would give victory for bulls. Actually it’s now the true testing time for the bulls and now whether they would be able to defend their territory or not is a big question and we have to closely watch. As the range of consolidation is for nearly one year we might see the market retracing to the levels of the range to around 5400-50 range and then attempt to move up where in it gives an excellent opportunity to go long.

it can be seen in the chart below that the market was stuck between 200 day MA and 100 day MA and not current break out has happened.

Now the question comes what would be the move. As the long range consolidation has broken off and this indicates what we may not be surprised if a new high is seen. Historically the break out of consolidation of one year or more are huge so keep your fingers crosses as I new two to three weeks the trend is going to be confirmed. 

Now we apply Fibonacci retracement and then see what are the implications. The market has corrected from around 6350 levels to around 4600 levels a fall of around 1750 points and now the market has risen by around 1050-1100 points so now its exactly at the 61.8% retracement of the entire fall from November 2010 to December 2012. So whether the retracement has completed or not only time would tell but we are at exactly the important retracement of 61.80% so watch out. It market move up then we can see it moving towards the next levels of 5950 and then the new high.  But first we have to see what is in store for next three weeks where in the trend is expected to be confirmed.

Wolf wave pattern: Wolf wave pattern which is popularly called at WW pattern has formed on daily charts for nifty. Its an extremely powerful pattern with success rate of nearly 80%. I myself has tasted success most of the times. One of the important features of this pattern is that it also give the probable target and which happens to be around 5150-5200 levels. So will the market go to those levels WW is pointing towards that but there is a catch in this the confirmation would come only on close below the 5500 levels. So till it’s not taken out there should be no problem for bulls. You may thing I have again become bearish its not that I am only telling the implications of the patterns.

  

 M. Sri Mahidar

Trend is Friend

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Sunday, September 23^rd  22.37 IST