Weekly technical Analysis for week ended 12^th July 2014

This week nifty opened at 7780 made an all time high of 7808 and thereafter started to fall and closed at low end of the week at 7459 resulting in a total loss of 292 points. This is the largest weekly fall of nifty in this year which clearly indicates that there is clear bears grip at-least for short term. Whether the bears would take the market further down it appears to be so but we have to wait and see for the coming week. In the weekly chart nifty has formed a bearish engulfing pattern at top which indicates a trend reversal at-least for short term till the high of the week is taken out. So the patterns are indicating that we might have reversed at-least for short term. nifty has also closed below the 20 day EMA for the first time after February 2014 after five months(Fibonacci), so we have to give some weight age to this down move. Now comes the question what would be the extent of fall, first of all there minimum retracement would be 23.60% which happens to be 7366, it seems we might see this achieving the same in the coming week. If this is taken out then we have all chances of market see moving towards 7093(which is nearly the low of 16^th may (election result) day which happens to be 7130).

The down move has also started after there was a negative divergence in the RSI on daily charts which is also indicating that we might at-least for short term move down wards to the targets indicated above.

I have been trying for long to work out of the  elliott wave and now it appears that the elliott wave pattern is falling into place. I would give the long-term wave structure as per me in coming one to two weeks. As of now I would give the wave structure of the latest up move and there after in coming weeks I would give the whole structure.

As of now it appears that we are in the corrective wave only and not a bull market as every body is thinking of or indicating . As per me we are in the wave –c of larger wave –B after which we might start the wave-C which has all chances of seeing very violent falls. Whether the wave structure is correct only market has to prove, it evolves over the period of time as the market moves. One thing is clear the time periods are not pointing towards a start of bull market. I have never in seen people identifying the bull market at the starting point only. This time everybody seems to have easily pointed the start of bull market which itself give on some doubt on the market. At the start of bull market every body would be doubting the move and as the market unfolds itself we start to get into the wave structure which confirms the starts of the bull market.

Now the question appears that when market is trading at all time high does that now signify the bull market or start of bull market. One thing to be noted is that every up move will not be bull market or bull impulse wave. Even in bears market the up moves would be there. The wave-B of the bear market also an up move but the wave structure does indicate that its not a bull market but a corrective wave in the bear market.

Now you might be thinking how, the current up move at all time high cannot be a bull market, we have to see the time lines of retracements. If you see, the market has fallen from 6354 (top of 2008) to low of 2252 in 10 months and it took nearly five years to retrace the same which generally signifies that we are not in a bear market. If you see during the last five year all the retracements have taken more time that the fall which itself signifies that the bull market might not have at-least started. So we have to wait for the faster retracement of the fall to signify the up move or bull market. I have once explained the time period retracements once in my blog.

Now we come to analysis as per Elliott wave, the current up move has started from the low of February 2014, the low of the February is the end of the 2^nd wave of the larget –wave-C( which I would give in next week) and we are in the third wave of the wave-C. it seems that we might have completed the wave-3 of 3 of larger wave-C and we might have started the wave-4 of wave-C post which we might start the final wave-5 of wave-C. The wave structure is given below.

  

M.Mahiidar

Trend is Friend

Enjoying Life

13^th July 2014