Weekly technical Analysis for week ended 7th May 2011.
Nifty opened on weak note and has been continued to be week through the week except on Friday where in the market rebounded with vengeance. Now the obvious question is for everybody would be having is whether the recovery has started or not. The only concern for the bulls is that the volumes on Friday were not so great even though the recovery was not so great. This week so month important things have happened during the week which would be music to the years of the bears, nifty has moved below 100 day, 50 day and 200 day EMA with ease which is clearly indicating the bulls were not able to defend at these territories. It appears that bulls might again attempt to conquer 200 day 50 or the 100 day EMA which are at 5631 and 5661 levels. if nifty nears those levels we have to be careful as any selling has all the chances of taking the market below 5400 levels and would be dangerous for the bulls as in that case we have chances of nifty moving towards sub-5000 levels, the patterns are suggesting that.
Positive for the market:
· Weekly MACD is in buy signal and is in process of giving a sell signal.
· Daily stochastic has just give a buy signal
Negatives
· Nifty is trading below 15 day, 50 day, 100 day and 200 Day EMA.
· Daily stochastic oscillator has given sell signal and is moving down.
· 50 day EMA is still trading below 200 day EMA indicating weakness.
· Daily MACD has given a sell signal.
· Monthly MACD is in sell mode indicating weakness in the market.
Elliott wave analysis:
Nifty opened on weak note and has been continued to be week through the week except on Friday where in the market rebounded with vengeance. Now the obvious question is for everybody would be having is whether the recovery has started or not. The only concern for the bulls is that the volumes on Friday were not so great even though the recovery was not so great. This week so month important things have happened during the week which would be music to the years of the bears, nifty has moved below 100 day, 50 day and 200 day EMA with ease which is clearly indicating the bulls were not able to defend at these territories. It appears that bulls might again attempt to conquer 200 day 50 or the 100 day EMA which are at 5631 and 5661 levels. if nifty nears those levels we have to be careful as any selling has all the chances of taking the market below 5400 levels and would be dangerous for the bulls as in that case we have chances of nifty moving towards sub-5000 levels, the patterns are suggesting that.
Positive for the market:
· Weekly MACD is in buy signal and is in process of giving a sell signal.
· Daily stochastic has just give a buy signal
Negatives
· Nifty is trading below 15 day, 50 day, 100 day and 200 Day EMA.
· Daily stochastic oscillator has given sell signal and is moving down.
· 50 day EMA is still trading below 200 day EMA indicating weakness.
· Daily MACD has given a sell signal.
· Monthly MACD is in sell mode indicating weakness in the market.
Elliott wave analysis:
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 or would be Fibonacci relations and generally 138.10% or 161.8% so if the pattern is confirmed then we have some amount of trouble coming into the market.
It appears that we might have completed wave-i of the wave -5 of the triangle is of length 450 points and it appears that we are in the wave-ii of wave-ii after which wave-iii would begin and which would be most disruptive and it would be at-least 1.618 times the wave-I so it can be of length of at-least 750 points which clearly indicates that we might see nifty drifting towards and below 5000 levels.
It appears that we might have completed wave-i of the wave -5 of the triangle is of length 450 points and it appears that we are in the wave-ii of wave-ii after which wave-iii would begin and which would be most disruptive and it would be at-least 1.618 times the wave-I so it can be of length of at-least 750 points which clearly indicates that we might see nifty drifting towards and below 5000 levels.
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:
In my previous update, I have indicated nifty has formed a wolf wave and any close below 5700 on weekly basis would confirm the same, we are just near 5700 so if it is confirmed during the current week then we have all chances of taking the market below 5000 as per this so be prepared for the same once the same is confirmed.
M.Sri Mahidar
Trend is Friend.
Sunday, May 8st 22.20 IST
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