Nifty this week has indicated indecisiveness except on Friday where in it has indicated and broke the good support at around 5400. During the entire week nifty was stuck between 5400 and 5550 and frustrated the traders or investors and on Friday suddenly from opening strongly to collapsing by the end of the day. The closing of the nifty on Friday was indicating extreme weakness. The close of nifty below 5400 is an extremely weak indication and it clearly indicates that bears have become strong in the market and further down ward movements are also not ruled out. the break of 5400 is a extremely weak sign. Currently we can expect nifty drifting towards 5200 levels.
Last week I have indicated that nifty has moved below 200 day EMA and this week also it stayed below it indicating the funds are not supporting the market and that also indicating the long term funds are just moving out of the market. One of the strong indicators of weakness is that this week it did not even make an attempt to conquer 200 day EMA which clearly is an indication that bulls are not interested in taking the market towards the EMA. The ease at which market broke below 200 day EMA is an indicating of extreme weakness in the market. So unless and other wise nifty makes an attempt to conquer the 200 day EMA bulls cannot hope any better days and all rises should be sold into. There are two important technical events that have taken place which are pointing towards extreme weakness. This week on monthly chart MACD has given a sell signal this is the first time after March 2009 that on monthly chart that MACD has given a sell signal. Another indicating is the deadly cross of 50 day EMA below 100 day EMA. Generally cross of 50 day EMA below 100 day EMA is considered at deadly cross as it is an indication of extreme weakness in the market or stock. This bearish cross has happened for the first time after april 2009 which is clearly indicating further weakness in the market and also bulls are active in the market and it would take hell lot of effort for the bulls to take control of the market. All these technicals are indicating that at present every rise has to be sold into and not buying to be done till the trend turns up and the same would be indicated by the market in the course of time and we can either be short on the market or just wait in the side lines.
Negatives for the market:
· Nifty has moved below 200 day EMA.
· Weekly MACD is in sell mode indicating weakness in the market and also every rise would be sold into.
· Monthly MACD has given a sell signal indicating extreme weakness in the market.
· Nifty is below 15 day EMA, 50 day EMA, 100 day EMA
· It has closed above 50 day EMA indicating strength for the bulls.
· Daily and weekly MACD is in sell mode indicating further weakness.
· Weekly stochastic oscillator is in sell mode and is moving down indicating that every rise would be sold into.
· The deadly cross of 50 day EMA moving blow 100 day EMA has happened which is clearly indicating extreme weakness.
Wolf Wave: last week in have indicated that wolf wave has confirmed and we have a target of around 3500 and we have to see whether the same is achieved or not. Historically it has been seen that the success rate of wolf wave is very high around 85-90%, and virtually the targets are met after confirmation of the same. so we have to see whether the same is achieved or not.
Elliott wave analysis:
The option –II which I have given nearly one and half months has been proved correct and I have indicated that we can see 5200 if metarialises. And we are nearly 200 points from those levels. EW has clearly pointed the target when every thing else was not clear. Now we come to the wave count and the probable targets the red one are clearly indicating that wave structure in all their internal structures. It seems the wave-I is from around 6350 levels to around 5690 a fall of points 660 points and then the wave -2 was a flat and it rose from 5690 to 6178 a rise of 488 points which is nearly 73% of the fall of wave-I which is near the Fibonacci after that the third wave has started to form. Generally the wave-III would be the longest one except the market proves otherwise. If wave-III is to be longest then it would be nearly (at least) 1.618% of the length of wave-I. So the length of wave-III can be of 1067 points so the market should fall around 1067 points from 6178 so the target comes to around 5100 levels. we have to see whether the same is achieved or not. I have no doubt about the market moving there. The extention of the wave-III is proved as the wave-III is breaking into its components. When wave-III is extended then as per the internal structure wave-iii of larger wave-III would also extend and as per this assumption we have still some room left for the market to go down as the wave structure is not yet completed. So market would not make a strong come back till the entire wave structure is complete. It appears that it might complete around 5100-5200 levels so we have still nearly 300 points to move down before market makes a strong come back to form a wave-2. So till that time bears would rule the world. If the market reaches levels of 5150 levels then we have to be carefull as market might make a swift up move so just watch the market for further down sides.
Pivot Point Analysis:
As per pivot point analysis, yearly Pivot is at 5716 and it is clearly gives an indication that nifty is blow the yearly pivot and which is a bearish indication and till it is below it, it has chances of moving towards s1 and s2. S1 is placed at 5093 and s2 is placed at 4053 so till nifty stays below the pivot of 5716 we can see nifty drifting towards 5093 and 4093. So now currently 5093 should offer support to the market so watch out for market to move to these levels.
M.Sri Mahidar
Trend is Friend.
Sunday, February 6th 21.53 IST
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