Weekly technical Analysis for week ended 16th July 2011.
I am writing this update after one week gap. During this period there seems to be significant events which I would discuss first and come to the current weeks movements. For the week ended 9th July indicated both strength and weakness, strength is indicated by movement above 5700 and close above it on 7th July and gave some hope for bulls but immediately on next day it opened slightly up moved up and late in the day has collapsed and nearly retraced all the gains of the earlier day, it retraced nearly ¾ of the earlier days rise giving a very bearish pattern as per candle and stick pattern i.e. Dark Cloud Cover(DCC). DCC is a very bearish pattern and it does not require any confirmation also, till the high of 8th is taken out the trend can be assumed to be down. So till 5740 is taken out we can assume the trend can be down as per DCC, so keep a close watch 5740. During the current week nifty opened on a weak note and on Tuesday there was a gap down opening and there after it started to continually move up and by the end of the week it moved above the gap but the close was below the gap, but the weekly candle was a red candle indicating strength for the bulls. The weekly candle was that of a hammer indicating strength of the bulls but the colour was not green which is negating the patterns implications. The market seems to be in a no trade zone and it is even puzzling the market men, one day it shows strength and other day it gives extreme weakness and vice versa. So trend is still side ways. So you might be wondering when the trend would be indicated. The uptrend would be confirmed only when there is a weekly close above 5950 levels and down trend would be confirmed when the two years trend line is taken out, this trend line appears to be at around 5450-5400 levels. Any weekly close below 5400 would be disastrous for the bulls and bears would celebrate as it would pave way for sub-5000 levels but there is in between support at 5200 levels. so any move on either sides would confirm the trend. So 5950 and 5400 are the two crucial levels to confirm the trend and any break on either side would confirm the trend.
One point to be noted is that nifty id exactly at 200 day EMA we have to see whether the same would offer support or not would be know in the current week. As of now 50 day EMA is below 200 and 100 day EMA and 100 day EMA is below 200 day EMA which is a bearish set up and till the pattern exists the bears would be happy as there are all chances of market moving down. So the pattern has to be closed watched.
I am writing this update after one week gap. During this period there seems to be significant events which I would discuss first and come to the current weeks movements. For the week ended 9th July indicated both strength and weakness, strength is indicated by movement above 5700 and close above it on 7th July and gave some hope for bulls but immediately on next day it opened slightly up moved up and late in the day has collapsed and nearly retraced all the gains of the earlier day, it retraced nearly ¾ of the earlier days rise giving a very bearish pattern as per candle and stick pattern i.e. Dark Cloud Cover(DCC). DCC is a very bearish pattern and it does not require any confirmation also, till the high of 8th is taken out the trend can be assumed to be down. So till 5740 is taken out we can assume the trend can be down as per DCC, so keep a close watch 5740. During the current week nifty opened on a weak note and on Tuesday there was a gap down opening and there after it started to continually move up and by the end of the week it moved above the gap but the close was below the gap, but the weekly candle was a red candle indicating strength for the bulls. The weekly candle was that of a hammer indicating strength of the bulls but the colour was not green which is negating the patterns implications. The market seems to be in a no trade zone and it is even puzzling the market men, one day it shows strength and other day it gives extreme weakness and vice versa. So trend is still side ways. So you might be wondering when the trend would be indicated. The uptrend would be confirmed only when there is a weekly close above 5950 levels and down trend would be confirmed when the two years trend line is taken out, this trend line appears to be at around 5450-5400 levels. Any weekly close below 5400 would be disastrous for the bulls and bears would celebrate as it would pave way for sub-5000 levels but there is in between support at 5200 levels. so any move on either sides would confirm the trend. So 5950 and 5400 are the two crucial levels to confirm the trend and any break on either side would confirm the trend.
One point to be noted is that nifty id exactly at 200 day EMA we have to see whether the same would offer support or not would be know in the current week. As of now 50 day EMA is below 200 and 100 day EMA and 100 day EMA is below 200 day EMA which is a bearish set up and till the pattern exists the bears would be happy as there are all chances of market moving down. So the pattern has to be closed watched.
Positive for the market:
· Nifty is trading above 15 day, 50 day, 100 day and 200 Day EMA.
· Weekly MACD has given a buy indication.
· Daily and weekly stochastic is in buy mode.
· Monthly stochastic is in buy mode and is about to give a sell signal.
· Nifty is trading above 15 day, 50 day, 100 day and 200 Day EMA.
· Weekly MACD has given a buy indication.
· Daily and weekly stochastic is in buy mode.
· Monthly stochastic is in buy mode and is about to give a sell signal.
Negatives
· 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
· Daily MACD is in sell mode,
· Monthly MACD is in sell mode indicating weakness in the market.
· 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
· Daily MACD is in sell mode,
· 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 it appears that we might have completed fourth wave and it appears that we have started the fifth wave and it appears as per the current wave structure and we might have completed the 1st wave of the fifth wave and it appears that we might be in final stages of completion of the 2nd wave of the 5th wave and after which we might start the 3rd wave of the 5th wave and generally the 3rd wave would be most violent and devastating and the longest. The first wave of the 5th wave was around 750 points and the second wave was nearly 61.8% of the first wave and wave would normally be at-least 161.8% of the first wave so we have chances of correcting around 1250 points from the end of the second wave of the 5th wave. The this pattern is pointing towards a very weak picture. So we have to wait till the pattern is negated till then we can hope the targets to be achieved.
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.
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.
M.Sri Mahidar
Trend is Friend.
Sunday, July 17th 19.32 IST
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