Weekly technical Analysis for week ended 29^th March 2014

Nifty during the week has opened on a positive note and has continued to move up on each day and virtually closed at the top an all time high. As the index is making a continues up move and that too a new high we can assume that the sentiment of the market is bullish and we have to wait for the market to reverse before taking any decision of shorting the market. Shorting the market is going against the trend/tide which is not advised as it can lead to huge losses as they mount, just accept that market is right and get out of the market. Its either be long or just sit and enjoy the market.

I have indicated in my earlier updates that we might be forming an expanding triangle and we are in forming in the fifth wave and we might end at any point of time. This week we would look into the up move from the start of this up move from December 2011 low of 4637 to the current high of 6702.

First we look into the larger picture from December 2011 low to this Fridays high.

 

The above chart is from the low of December 2011 of 4637 to Fridays high of 6702 a rise of nearly 2100 points a phenomenal rise. It can be seen that the rise for last two and half years has been within a trading channel represented by black lines. We can clearly see that the market was rising within the channel only and the market was respecting the support and resistance lines. It can be seen from the above chart that the market was finding resistance line indicated by arrows, and whenever it touched the resistance line the correction was in a big way. It can be seen in the chart that now we are nearing the two and half year resistance line so we can assume that we might be in forming some topping formation we have to go for details of the wave to see whether we are in topping formation or we can just give a break away formation.

The expanding triangle formation from September 2013 onwards.

 

It can be seen from the above chart that the market is forming an expanding triangle from last six months and it seems that we are in formation of the fifth wave of the same and on completion of the same we can expect the market to move down in a bigger way, till that happens we have to see for possible upsides opening up.

 Elliotte wave break up of the fifth wave

 

Given above is the Elliott wave breakup of the fifth wave of the expanding triangle. As has been indicated earlier also, it seems that we are in formation of the fifth wave of the triangle and we are also in formation of the fifth wave of the fifth and the fifth of the fifth is further breaking down into its components which is giving and indication the we might further move up before the wave culminates. I would post updates of the same regularly as it the wave structure progresses. It can be seen that the market is moving in the channel indicated by orange dotted lines till that is in the channel we would be moving up. Any break of the channel would signal the probable end of the wave. So now comes the question of how far the market can move up in the present move. So we can have targets of 6671,6746,6820 and 7061. Market has all fair chances of culminating at any of these targets. 6671 is already achieved and we are near the second target. So keep a watch on these targets and also the wave structure also the wave structure is indicating that we might move towards 6820 before culminating but wait for the market to give an indication.

M.Sri Mahidar
Trend is Friend
30^th March 2014