Nifty movement during the week on one side indicates bullishness and also on another side it indicates strength of the bears which might have been overlooked by all. You might be wondering how can this happen I would explain the details. This week there are five trading days and of these three are red candle days and two is a green candle day. the red candle indicates that the close is below the open so all these days the closes were less that the open indicating that bulls were able to take the market down which clearly indicates that the market is in a bearish mode and it indicates the bears were having upper hand even though the market as moving up. This generally is a rare phenomenon and we should patiently wait for the market to drift down. One of the noticing feature of the current move is that nifty is able to find support at around 4900 levels and another thing is that it is able close above 5000 level which is a psychological level for bulls. Another important thing which is happening is that nifty is nearing 5200 level where it faced resistance in its previous up move, so we have to see whether it would offer resistance at these levels or not. Technically not much has happened during the week so not much can be provided during the week what even has been said during last week holds good even for this week also.
One of the noticing feature of the current pattern is that in 2008 also H&S pattern was broken it moved up touched neck line in September and then collapsed, this time also in September we are moving towards the neck line after H&S pattern so this time also history would repeat we have to wait and see.
Positive for the market:
• Nifty has moved above 200 week EMA.
• Daily MACD has give a buy signal
• RSI has is moving up and has just moved to 50.
• Stochastic oscillator is in a buy mode.
Negatives
• Nifty is trading below, 50 day, 100 day and 200 Day EMA.
• 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
• weekly MACD is in sell mode,
• Daily and weekly stochastic is in sell mode.
• Monthly MACD is in sell mode indicating weakness in the market.
Elliotte 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 have completed 2nd wave of the 5th wave and it seems that we might has started the 3rd wave of the 5th wave and generally the 3rd wave would be most violent and devastating and the longest, which is being indicated by gap down opening. 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 which happens to be around 5700 levels giving us a target of 4500(o no) we might doubt this target but if the pattern is correct then we have all chance of correcting. So now we are near the target so Elliott wave has again played its part.
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 otherwise we can expect these levels. The latest wave count is give above
The updated wave structure is given in the chart below. Last week I have given three options and it appears that one option has materialized and which is given below. As per Elliott it appears that we are still in formation of third wave it appears that we might have or on process of completion of the 4th wave of the third of third and we might have started the fifty wave of the third and the target for the same comes to atleast around the low of the august so will be reach the target. Wait and watch. If any change in the wave structure would be furnished once it is confirmed.The completion of the fifth wave of the third would result in completion of the third of the fifth wave and after which the market would turn up very vigorously towards atleast 5200 levels and from there the fifth of fifth would start and as per the expanding triangle the fifty wave should be more devastating of the all waves so that would happen or not we have to wait and watch. So Elliott is telling that its still not time for long time investment in stocks. So just stay in cash.
India VIX
India VIX( volatility index) is giving an interesting thing, it is giving an indication that it has just broken the triangular formation for one year or so and it has just taken support of the trend line and moving up indicating a perfect set up. Market generally moves in opposite direction of the VIX, indicating that we have all possible chances of market moving down to a great extent we have to wait and watch for the same. Given below is the weekly chart.
M.Sri MahidarTrend is Friend.
Sunday, September 18th 18.00 IST
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