Weekly technical Analysis for week ended 18th June 2011.
Nifty ended the week with a very weak note, the close of the weak was the lowest point of the week. Last week I have indicated that nifty has broken the range of 5500-5600 to below 5500 and it indicates weakness and market might drift further down. And this week market has tried to move above 5500 but failed to sustain above it and by the end of the week it moved further down. This week it moved below 5400 and also closed below it which is indicating a weakness in the market. Now nifty appears to be at very crucial support level. Nifty is at the trend line where it has found support at-least 6 times during last nearly two years( to be accurate 22 months) please note 21 happens to be Fibonacci and we have completed 21 months and we are into 22nd month. As the time length is long the support happens to be a very significant one. We have to see whether nifty would find support at this support line. But any break of the same would be a very dangerous one for bulls and we can expect market drifting further downwards at-least towards 4700 levels. So please keep a close watch at this trend line. Last week nifty closed below this trend line its very near to be comfort for bears. So it is better it closes below it in the coming week also. Any close below 5350 preferably below 5300 would be a good one. So nifty technically is at a very crucial level. Coming weeks would be very very curcial as it would decide the future course of action.
Nifty ended the week with a very weak note, the close of the weak was the lowest point of the week. Last week I have indicated that nifty has broken the range of 5500-5600 to below 5500 and it indicates weakness and market might drift further down. And this week market has tried to move above 5500 but failed to sustain above it and by the end of the week it moved further down. This week it moved below 5400 and also closed below it which is indicating a weakness in the market. Now nifty appears to be at very crucial support level. Nifty is at the trend line where it has found support at-least 6 times during last nearly two years( to be accurate 22 months) please note 21 happens to be Fibonacci and we have completed 21 months and we are into 22nd month. As the time length is long the support happens to be a very significant one. We have to see whether nifty would find support at this support line. But any break of the same would be a very dangerous one for bulls and we can expect market drifting further downwards at-least towards 4700 levels. So please keep a close watch at this trend line. Last week nifty closed below this trend line its very near to be comfort for bears. So it is better it closes below it in the coming week also. Any close below 5350 preferably below 5300 would be a good one. So nifty technically is at a very crucial level. Coming weeks would be very very curcial as it would decide the future course of action.
I have indicated in my earlier update 100 day EMA has moved below the 200 day EMA and this is the most bearish indication. This bearish crossover has happened thrice in last 11 years first in year 2000 where market corrected nearly 90% of the total rise till that time, second time in 2004 when the market fell by heavily (actually it fell nearly 70% of the total rise till that time) and second one in june 2008 and in this case also market has fallen by 70% of the rise till then. Considering this can we expect the same this time also, history is pointing towards that so till this bearish crossover maintains we can expect a heavy fall in the market so better watch out.This week even the 50 day EMA is just moved below 100 day EMA which is again a bearish indicator.
Positive for the market:
· Weekly stochastic is in buy mode and trying to give sell signal.
Negatives
· Nifty is trading below 15 day, 50 day, 100 day and 200 Day EMA.
· 100 day EMA has moved below 200 day EMA indicating extreme weakness.
· Daily and Weekly MACD has given a sell signal indicating weakness,
· Monthly MACD is in sell mode indicating weakness in the market.
· Daily stochastic oscillator is in sell mode
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 also. it also appear that we might have completed wave (I) and (ii) of wave-(3) of wave-5 which indicates that we might just begin wave-(iii) so we can see a swift movement on down side and which would be most disruptive. So we shall prepare for the same we might see very violent movement in the market in coming days or weeks so be prepared for the same.
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 also. it also appear that we might have completed wave (I) and (ii) of wave-(3) of wave-5 which indicates that we might just begin wave-(iii) so we can see a swift movement on down side and which would be most disruptive. So we shall prepare for the same we might see very violent movement in the market in coming days or weeks so be prepared for the same.
Generally in Expanding triangle pattern the fifth wave goes near or below the trend line and the low the trend line is more frightening for bulls around 3800 levels really scary. Nearly 80-90% of the time it happens. So till it is proved other wise we can expect these levels. or till EW pattern is violated b movement above 4th wave.
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, June 19th 19.45 IST
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