Nifty all through the week has indicated weakness. Nifty opened virtually flat moved slightly higher to 2953 then started to fall and made a low of 2709 and finally closed 2736 resulting in a net fall of 212 points during the week. Nifty has formed a long red candle during the week and erased the last two weeks gain at one shot thus again giving an indication that we are still in a bear market as the fall was more faster time wise that the rise. Till this phenomenon is reversed we have all the of fall to October lows. One key feature that has occurred during the week is that nifty has again moved below the 20 day EMA and is still falling. One point to be noted is that nifty is struggling to move above the 50 Day EMA. From the month of October onwards nifty has just touched/moved fractionally above the 50 DEMA and immediately fallen. So in the coming weeks the 50 Day EMA should be closely watched as any breach of it successfully on upper side will give an indication for us to go long on the market. As 20 day EMA is still below the 50 DEMA and price is also moved below the 20 DEMA it goes on to prove that further down sides are not ruled out. 20 DEMA is at 2830 and 50 DEMA is at 2890 so these are the levels on the upper side which should be closely watched as nifty might face strong resistance at those levels. When ever those levels are reached you stop loss should be tightened.
Elliott Wave Analysis:
From last few weeks I am discussion two options one being triangle and other being a flat. Both of them neither are nor ruled out as of now and it appears it is in favor of triangle.
Last week I have indicated that we the minimum 50% retracement for “e” wave has completed and nifty has moved above the next 61.8% resistance level at 2961 it has made a high of 2669 and then fell in the previous week. In the current week it moved slightly moved near the 61.8% at 2961 high during the week was at 2953. The failure of this to move above 2961 has suggested that we might see a quicker down sides and it will be confirmed by the break of the b-d trend line. During the week it has nearly taken support at the b-d trend line and slightly moved up. The b-d trend line is at 2680. As the coming week is a truncated week and also a derivative settlement week we might see a good amount of volatility and market moving in either direction. The start of the week we might see the market moving towards the 2800 and also 20 day EMA at 2830. Any failure to move above the two levels will indicate weakness and should be taken as an opportunity to short the market and any break of the b-d trend line will confirm the completion of the triangle and nifty might attempt to move towards the October lows.
Flat:
Last week I have indicated that we might has completed the irregular flat and we might be in ultimate 5th wave and it has all the chances of making a new low of October 2008. It may be noted that the rise from the low of 2661 to 2969 consisted of only three waves. As the raise of counter wave consisted of three waves in indicating that we might have completed flat at 3147 last month. It appears that we have completed wave-A and wave-B of the fifth wave and we might have just started the 3rd wave. Generally the 3rd wave will be the most violent in price terms, indicating that we might see a vicious fall from the current levels, vicious fall might be sharp fall in very short time. Considering this we might be in for a good fall.
Directional Momentum Index (DMI)
During the week DMI has slightly moved up from14.75 to 15.13. But the –ve break out of the one week previous week has not converted into –ve break out as -D1 line has moved above +D1. After -ve break out the DMI is moving up indicating that bears are gaining upper hand and also the –D1 line is raising at a faster rate also indicating that bears are gaining upper hand at a faster rate. We have to watch out for movement of DMI above 20 for any strength of the direction. In October also it has give a positive break out after –ve break out and immediately has give a –ve break out and market tanked we have to see whether the same happens now or not.
Resistances: 2750/2800/2830/2900
Supports: 2700//2661/2503/2223
M.Sri Mahidar
Sunday February 22nd 2009 time 8.00 PM IST
Sunday February 22nd 2009 time 8.00 PM IST
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