Nifty during the week was in a very tight range of 130 points and in the coming week or weeks we can see the range expanding and market moving in that direction in a long way. On the noticing features is that nifty is finding resistance at 200 day EMA and finding support at 100 day EMA so its struggle between these two. So we have to see in which direction the break out happens. 200 day EMA offering resistance is good news for bulls and 100 day EMA offering support is good news for bulls, so it clearly indicating that the market is undecided and we have to patiently wait for market to break any of these levels. Market failing to go past 200 day EMA is good news as historically below 200 day EMA bears are active and long term investors are active above 200 day EMA. So as long as it is below 200 day EMA bears would be active. Actually this week nothing has happened in the market as to give a detailed analysis.
The heads and shoulders pattern indicated three months back is still intact and till the neck line is violated we have all chances of nifty moving down towards the intended target of 4200 in coming months we have to see whether the same would be violated or not. Now we are nearing the neck line which is nearly 200 points away. Now we have to see whether the same is violated or not.
the H&S pattern is clearly depicted in the above chart. it appears to be forming a perfectly H&S pattern. And if it materializes we can get an excellent shoring opportunity at around neck line. The neck line is of nearly two years trend line so its going to offer a good amount of resistance in the upside movement of nifty. If nifty closes above it on weekly basis then we can see nifty moving up substantially probably above 6000 levels. But as of now the probability appears to be break but we cannot rule out anything in the market.
Positive for the market:
• Nifty has exactly taken support at 200 week EMA.
• Nifty has moved above 50 day EMA,100 day EMA
• Weekly MACD has given a buy signal
• Daily MACD is in buy signal.
• Daily and weekly stochastic is in buy mode.
Negatives
• 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
• Monthly MACD is in sell mode indicating weakness in the market.
• 15 week EMA is below 50 week and 100 week EMA.
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 and we have nearly achieved the same. But still nifty has to violate till then it would hold good.
The updated wave structure is now being given. This structure has to be negated if 5453 is violated by nifty in the current move and I have to work out the new structure. As of now it appears that we are in completion of the fourth wave of the third wave of the third of the fifth and after the completion of the same we have all possible chances of nifty dropping down towards 4700 levels. As of not it appears that the fourth of the third of fifty is forming a flat and all the internal structure is perfectly falling in place but any move above 5453 would negate the pattern and I have to rework the pattern which would be done when the same happens.
M. Sri Mahidar
Trend is Friend.
Sunday, November 6th 19.26 IST
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