Weekly technical Analysis for week ended 16th April 2011.

This week was a truncated week, and not much seems to have happened during the week technically. On Monday the market was weak on Wednesday it made a spectacular recovery and on Friday again it corrected and closed in red. Only the rise on Wednesday made bears runs for shelter. The market is still above all the moving averages indicating that bulls are still in control of the market. One of the positive things is that nifty has take support at the 15 day EMA and reversed with vengeance from there so it appears as of now 15 day EMA is offering good support and till the market is above it the bulls would be having last laugh.15 day EMA is at 5782 so till it is above it bulls can have a party. But the movement on Friday appears to be somewhat worry some as it is just followed by a big bull candle of current year. The volume on Wednesday, the day of the big bull candle were not so encouraging. Generally the volumes would be very high during those days but that is not the case now. We have to see whether the market would maintain or tank. Please see in the Elliott wave update for any details.

Positive for the market:

• Nifty is trading above 50 day, 100 day and 200 Day EMA.


• Daily MACD is in buy mode but in the process of giving a sell signal. ·


• There is a divergence in MACD histogram. ·


• Weekly MACD has give a buy signal

negatives developing: ·

• Daily stochastic oscillator has given sell signal and is moving down.


• 50 day EMA is still trading below 200 day EMA indicating weakness.


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

Elliott wave analysis:

Generally Elliott wave give a clear picture when there is uncertainty, and Elliotte is giving the same. In previous weeks I have indicated that we might be forming an expanding triangle and we are in formation of the fourth wave and after completion of the same we can see fifth wave developing which would take the market down very swiftly and it would be very violent and also the longest of all the waves. The longest wave till now is of length 1000 points so the fifth wave would be of at-least 1000 length so we have to prepare for the same. The pattern is similar to that has been formed in January to may 2004 which is given below:

You see the fifth wave which is from around 1900 to around 1300 levels that have been the longest and the most volatile. Whether the same would happen now we have to wait and watch. Generally in an expanding triangle very body gets bullish on completion of the fourth wave and then the market suddenly turns the same seems to be happening now and the same was in April 2004 so we have to see whether the same happens now or not. Just wait and watch.

Wolf wave:

Nifty seems to have formed a wolf wave over a period of last two months. The volumes are also suggesting the same. As in WW the volumes would be very high in the formation of the fifth wave and the same appears to have happened. So any close below 5700 would confirm the same, then the target comes to be around 4700-4800. Whether the targets would be met or not only market would tell. So patiently wait for nifty to close below 5700. So keep a close watch.

M.Sri Mahidar

Trend is Friend.

Sunday, April 17th 19.50 IST