Weekly technical Analysis for week ended 29th May 2011.
Nifty’s movement during this week surprisingly is showing strength of the bulls. Nifty opened on a weak note and moved further down and made a low of 5328 and thereafter moved up and closed at 5476. For the first time in five weeks it has made a weekly green candle and also the candle appears to be a hammer indicating that bears have tried to take the market down but were not successful as bulls were able to take the market up and close at virtually at the high of the week. This clearly a symbol of strength of the bulls, and it has to be confirmed by continued buying in the coming weeks. We have to see whether the buying would come this week also, if it comes we can see further movement of the market. On of the significant things to be seen is that there are confluence of EMAs at around 5600-5650, generally when there is confluence of EMA then it would be not easy for the market to move past it when it has moved just below them. So, it would be very very difficult for the nifty to go past 5650 levels. So if we go near these levels then it would be better to protect our longs. If the market fails to move past 5650 levels then we can see a greater or a steeper fall that what is seen in the last few months and if you see Elliott wave also it is coming to a crucial levels and is pointing towards a possible collapse of the market from these levels. All these are indicating something dramatic in the market in the coming weeks. So be prepared for it.
One of the extremely bearish feature which has happened during the week is movement of 100 day EMA below the 200 day EMA ( it can be seen in the chart below by blue signal) that too only on fall of nearly 15% from the top. This is extremely bearish for the market. You may be asking why in the last six years there have only been three times when 100 day EMA has moved above below 200 day EMA. first time it moved above 200 day EMA in November 2004 and from there market nearly tripled, there after it moved below it in june 2008 and after that market collapsed from around 5000 levels to 2250 nearly 50% fall and there after it moved above 200 day EMA in june 2009 and thereafter market nearly doubled. After that it moved below the 200 day EMA in June 2011 now what to expect? History is indicating a heavy correction in the coming weeks or months. So be prepared for it.
Positive for the market:
· Daily stochastic is in buy mode
Negatives
· Nifty is trading below 15 day, 50 day, 100 day and 200 Day EMA.
· 50 day EMA is still trading below 200 day EMA indicating weakness
· 100 day EMA has moved below 200 day EMA indicating extreme weakness.
· Weekly MACD has given a sell signal indicating weakness,
· Daily MACD is in sell move and is below the signal line.
· Monthly MACD is in sell mode indicating weakness in the market.
Elliott wave analysis:
Nifty’s movement during this week surprisingly is showing strength of the bulls. Nifty opened on a weak note and moved further down and made a low of 5328 and thereafter moved up and closed at 5476. For the first time in five weeks it has made a weekly green candle and also the candle appears to be a hammer indicating that bears have tried to take the market down but were not successful as bulls were able to take the market up and close at virtually at the high of the week. This clearly a symbol of strength of the bulls, and it has to be confirmed by continued buying in the coming weeks. We have to see whether the buying would come this week also, if it comes we can see further movement of the market. On of the significant things to be seen is that there are confluence of EMAs at around 5600-5650, generally when there is confluence of EMA then it would be not easy for the market to move past it when it has moved just below them. So, it would be very very difficult for the nifty to go past 5650 levels. So if we go near these levels then it would be better to protect our longs. If the market fails to move past 5650 levels then we can see a greater or a steeper fall that what is seen in the last few months and if you see Elliott wave also it is coming to a crucial levels and is pointing towards a possible collapse of the market from these levels. All these are indicating something dramatic in the market in the coming weeks. So be prepared for it.
One of the extremely bearish feature which has happened during the week is movement of 100 day EMA below the 200 day EMA ( it can be seen in the chart below by blue signal) that too only on fall of nearly 15% from the top. This is extremely bearish for the market. You may be asking why in the last six years there have only been three times when 100 day EMA has moved above below 200 day EMA. first time it moved above 200 day EMA in November 2004 and from there market nearly tripled, there after it moved below it in june 2008 and after that market collapsed from around 5000 levels to 2250 nearly 50% fall and there after it moved above 200 day EMA in june 2009 and thereafter market nearly doubled. After that it moved below the 200 day EMA in June 2011 now what to expect? History is indicating a heavy correction in the coming weeks or months. So be prepared for it.
Positive for the market:
· Daily stochastic is in buy mode
Negatives
· Nifty is trading below 15 day, 50 day, 100 day and 200 Day EMA.
· 50 day EMA is still trading below 200 day EMA indicating weakness
· 100 day EMA has moved below 200 day EMA indicating extreme weakness.
· Weekly MACD has given a sell signal indicating weakness,
· Daily MACD is in sell move and is below the signal line.
· 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 have completed in the wave-ii 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 have completed in the wave-ii 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.
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. As nifty has closed below 5700 on weekly basis it appears that we are on our way to sub-5000 levels.
M.Sri Mahidar
Trend is Friend.
Sunday, May 29th 21.29 IST
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