Weekly technical Analysis for week ended 16nd June 2012.
During the week nifty did nothing
but just moving in a close band of 70 points only and this is frustrating for
the markets. It clearly shows that market does not know where to go and was not
able to move in any direction and it was waiting for the news to make a move.
One day the news was good so moved up and the second day not so good news and
it moved down again. Market was moving only to both international and national
news. This clearly shows that market is
undecided and the further movement would depend entirely on news. The movement
appears to be slightly in favor of bulls .I have observed in my short stint as
a investor and trader that whenever market moves only on news the moves are not
sustainable. It may be on upside or down side. The present market from the lows
of 4800 appears to have moved entirely on news and not on its own. So my view
is that the up move would not sustain as we cannot expect positive news
continuously. It may be noted that the raise during the last 10 days was on low
volumes which is clearly indicating the market participation is not so great.
The volumes should be high during the rise this is the cardinal rule. But as I
say price is the king and we should believe in it and what even may be our
study when price is saying one thing just believe in it. So as of now the price
is saying market wants to move up and it is the thing we should do. As of now
market is trying to move above the major EMAs which is a positive news for the
market. Market has moved above the 50 day and 200 day EMA which is a good sign.
Its now just above the 200 day EMA which happens to be around 5070 and till
market is above it bulls would try to dominate the market. This would be keenly
observed by the market participants as any move below it would sound death
knell for the bulls. 100 day EMA 5200 levels so market might find some
resistance at those levels and it is taken out then we can see a good and
healthy movement for the market as bulls would get confidence. It may be noted
that on a weekly chart the nifty has formed a hammer which gives an indication
the bulls are strong and they intend to take the market up. It may also be
noted that 100 week EMA is at around 5400 levels and we can expect the market
to find resistance at that level. In the previous upmove from lows of December
we have found the resistance at that level only. Market moved above it and then
collapsed to sub-5000 levels. so even in case of extreme positiveness in the
market we might find huge resistance at 100 Week EMA. I have been observing
that over the last five to six months market is oscillating between the 200
week EMA and 100 week EMA. It is finding support at the 200 week EMA and
finding resistance at the 100 week EMA. In December it moved below the 200 day
EMA/SMA and then move up and again found resistance at 100 week EMA/SMA. We
have to see whether the same happens now also. So these are the areas which are
to be observed closely. One of the important things which are to be observed is
that market has been making consistently making lower lows till now from
November 2010 onwards and this is the first time it has not made a lower
low(means did not move below the low of December 2011 low) and if it moved
above the high of 5630 its high then we can say that we are in the firm grip of
bulls and till that is done we can only assume that we are still in a bear
market. So we have to see whether the market would go up and make a new high
for 2012 to would fail to do so and confirm that we are still in a bear market and
would go on to make a new low for 2012. Even the Elliott wave is becoming more
complicated and I am not able to give it as I myself am not in a position to
confidently tell what it is. I would try
to work out on the same this week and give up the Elliott wave update in the coming
weeks.
Positive for the market:
·
20 week EMA has moved above the 50 week EMA
·
Nifty has moved above the 50 week EMA
·
Market has moved above the 200 day EMA – big
positive for the market.
·
Daily
MACD is in buy mode and is moving up above 0 which is really a positive sign.
·
Negatives
·
Weekly and daily MACD are in sell mode.
·
ADX +D and –D all the three are moving down
which is indicating that market might not be trending.
·
Stochostic oscillator is in extremely over
bought zone.
M. Sri
Mahidar
Trend is Friend
Celebrate
Life
Sunday, June 17th 20.50 IST
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