Nifty Weekly

Weekly technical Analysis for week ended 15th October 2011.
This week nifty movement is indicating some strength and we cannot ignore the same. Whatever may be our technical interpretations, the market is showing strength and we have to believe it till it shows/indicates weakness. We have been discussing from so many weeks that nifty is stuck in range of 5200 to 4700 and every time when it goes near 4700 it bounces towards 5200 and whenever it moves nears 5200 it again falls to 4700. So I have been indicating that till this range is taken out we have to trade this range. This time it is again nearing 5200 and coming week we might see nifty attempting to cross 5200 we have to see whether the same would be conquered or selling pressure would emerge again or not. But this time it appears that we might see nifty moving above 5200. Elliott wave is clearly indicated when it took support at 4700 and the same appears to be coming true. The elliotte wave details would be given in the relevant section. One of the noticing feature of the current move is that nifty has bounced from the 200 week EMA which is a indication of strength of the bulls. I have indicated in my earlier updates that 200 day EMA is the last line of defense for the bulls and it appears that bulls were able to defend the territory. Bouncing from the 200 EMA is bullishness for the market. As nifty has bounced from the 200 day EMA the next resistance appears to be at 100 week EMA which happens to be at 5252. So this is the level which has to be watched. Nifty has been founding support at 200 week EMA and resistance at 100 week EMA for lat two and half months. So 100 week EMA is going to offer healthy resistance this time also. So as of instead of 5200, 5250 is going to be healthy resistance level. So this is the level to be watched for. Generally market goes above the resistance level, gives an impression that resistance is taken out and bullishness has come into the market and then market plunges we have to see whether this time also the same happens or not. If 100 week EMA is taken out it might find resistance at 50 week EMA. So we are entering in the territory of resistance levels. And the coming weeks are going to be testing time for the bulls and we might find resistance at each and every level. One of the noticing feature of the last weeks movement is that the volumes are less on the green candle days and more on the red candle days and during the last week each subsequent day the volumes were less than that of the previous days which would be concern for bulls. One of the noticing features is that weekly MACD is on the verge of giving buy signal which becomes a bullish signal we have to see whether the same would materialize or not.
The chart below is clearly indicating the resistance and support levels for the nifty. The double headed arrow is indicating the 200 week EMA and 100 week EMA on either sides and we can clearly see the resistance and support levels. And also not the two important things in that chart one is indicated by blue arrow is at 5200 which is the level which was taken out in august and that would offer resistance as of now. And if it is taken out then we have resistance at blue line indicated by red arrow. This is nearly two years resistance level and also neck line of the break down from the H&S pattern which break down has happened in august 2011. So till all these resistance levels are taken out bulls cannot be comfortable.
 

Positive for the market:
• Nifty has exactly taken support at 200 week EMA.
• nifty has just moved above 15 week EMA.
• Nifty has moved above 50 day EMA and is approaching 100 day EMA.
• Daily MACD is in buy signal.
• Daily and weekly stochastic is in buy mode.
Negatives
• Nifty is trading below 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,
• 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.
It appears that we might have completed the third wave of the fifth wave and we might have just started the fourth wave up and which should move above 5200 to confirm the same, that is why I have said earlier that we might see nifty moving above 5200 giving a false break out and then collapsing. Once the fourth wave is completed we might start the fifth wave which should be devastating wave. Generally the fifth wave of the expanding triangle should be the most devastating and we might enter into the fifth of the firth in the coming weeks which would plunge the market to sub 4500 levels probably sub 4000 levels. So be prepared for the same.
Another alternative which can be derived as of now is that, we might still be completing the fourth of the third wave of the fifth wave. The fourth of the third wave of the fifth wave might be forming a flat and in which case market might start the fifth wave of the third of the fifth which has chances of taking nifty towards or below 4700 levels and after that once again nifty has all chances of attempting 5200 again and then plunge. So not the wave structure is becoming complicated so would give sleepless night for the Elliott wave analysts.

M.Sri Mahidar
Trend is Friend.
Saturday, October 15th 23.21 IST

nifty Weekly Technical update

Weekly technical Analysis for week ended 1st October 2011.
This week the market is of mixed trend, but it still showing a weakness and it appears that bears are active even during the current week also as out of five trading days three days were bear candle days even though nifty closed with a positive candle. This clearly indicates that the closes were lower that the opens, thus indicting that the close were at the lows of the days. This week nifty opened on a weak note with gap down and there after recovered and moved up and moved above the psychological level of 5000 and on Friday even though it moved above 5000 it again collapsed down to close below 5000 second week in a row. There are so many things which are happening during the week technically and every thing is pointing out that bears are slowly and steadily becoming active and it appears that we are nearing days when capitulation is going to take place in near future where bears would just demolish bulls. Till now at every stage the bulls are coming back and trying to take market up and failing and the time/day would come were they would completely surrender to bears and we might see some vertical falls in coming weeks or months. One thing is sure that until the capitulation takes place the market is not going to turn up. I have seen in my short technical career that till there is a vertical fall( which generally is the last stage of the fall) there bear market is not going to end. So we have to wait patiently till the vertical 90% fall happens till then the market would be drifting slowly downwards. Now we come to the technical features which have occurred. One of the powerful thing is that 50 week EMA has moved below 100 week EMA which is a very bearish indication. this even has happened for the first time after may 2009 which itself is an indication of weakness. I would explain the thing in details which clearly gives the bullish and bearishness in the market. The 15 week EMA moved above 100 week EMA in 2003 and it maintained above it for till September 2008( it was in bullish mode till 5 years) when it moved below 100 week EMA and there after market collapsed you know that its still fresh in our memories. And one this which is to be noted is that this time also it moved below 100 week EMA in September only so will there be any co-incidence this time also, if that happens then we are in for a big big fall this month which happens to be in October. Another thing to be noted that in 2008 Diwali was in October that too on October 28th and just before diwali the market tanked and made low on a day before diwali. This time also diwali is on 26th so will history repeat itself. Wait and watch. It has been seen that in October is the month where if it’s a bull market the market just races up and if its bear market the markets just tank. So we have just entered into October and we seem to be in a bear market so will we see a good and healthy fall in the market and form a bottom. Just wait and watch And another thing is that nifty again moved below the 200 week EMA during week and there after recovered and closed above it. 200 week EMA is at 4838 and any move below it would signal bearishness in the market. So now 4838 is the level to be closely to be watched. So keep your fingers crossed, and patiently wait as we may get good prices which can be lower that the prices as of not at-least 30-40% lower than the current levels.

It can be seen in the below chart the movement of the 15 week EMA below 100 week EMA by a red circle. This event has happened for the first time after nearly 27 months indicating weakness. 

Positive for the market:
• Nifty has exactly taken support at 200 week EMA.
• Daily MACD is in buy signal.
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.
• 15 week EMA is below 50 week and 100 week EMA.
Elliotte wave analysis: nothing much has happened as EW during the week to change any thing so it remains same as it is.

M.Sri Mahidar
Trend is Friend.
Sunday, October 2nd 19.26 IST

Weekly technical Analysis for week ended 24th September 2011.
In last week’s update, I have indicated that even though the market was moving upwards I have indicated that the undertone appears to be week as the close on was at the low point of the day and this week it appears that this week the market has proved us right. So it clearly appears that the bears have taken control of the market. We might given reasons for such weakness, like US, EOROZONE crisis, but technical’s were indicating the same for long time now and if any body is following this weekly update then, the current market fall might not have been surprise for them. Then you might be having a question, as to how technical’s show this, technical’s only show the perception of the investors towards the market and its we have to infer the same. technical show that there is something wrong in the market or going to be wrong and then the news flows after some time. Generally price discounts, 6 months ahead especially during the turns. As you can see the market has turned down in January or so and there after the market started to fall vigorously in July etc., and also note that news have also become very negative during this period only. I have seen in my short stint as a technical analyst, that price destruction occurs first and then news flow. So when the prices or pattern shows something is wrong with the market or the patterns are now comfortable then its better to respect that, and be cautious with the market as it our utmost responsibility to protect our capital. Now we would come to the market.
This week the market opened slightly low and there after moved up towards 5200 levels and from there it collapsed on the last two days of the week. It can be observed that the rise takes longer days and the fall is less that 50% of the time of rise which clearly indicates that bears are having upper hand in the market. Till this phenomenon reverses we can clearly hope that the trend is down and if the scenario reverses then we can easily go long. Last two days have really scary for bulls as it seems to have dented the confidence of the bulls and it appears that they might have given up to bears. One of the very very important things which has happened during the week is that nifty failed to move above the 5200 level and now it appears that 5200 is the laxman rekha for the market. So till 5200 is taken out on weekly basis bulls cannot feel comfortable. It can be seen from the chart below that selling is coming in a substantial level at around 5200 levels and it has been a substantial gap down in the market at that level. Now it’s the third time nifty has reversed from 5200 levels in last two months. So it cannot be taken lightly. When one level offers resistance continually then we can expect as substantial down side from that level or market would consolidated at that levels to gain strength and then make an attempt to conquer the resistance level. So we can either expect a down side from current level to take out the selling pressure or consolidated. Genearlly it takes longer time. so we can expect atlest 5-6 months for the market to gain strength. But if the price indicates reversal earlier then just believe in price. As my motto is “PRICE is KING”.
Point and figure charting clearly shows at what levels the selling or the buying pressure would come as it considers only price and nothing else. It can be seen in the chart below that there is a clear selling pressure at around 5200 levels. And the buying levels are around 4800, 4600 and 4500 levels. P&F charts are clearly indicating that hell would break loose if the nifty moves below 4600-4500 levels as we might see a verticals fall as has been seen in 2008 so we are not very near those levels so be careful while investing at these levels as any failure to the bulls to defend that territory would be disastrous for them.

It can be seen from the chart above that in 2009, 4500 was offering resistance for nearly six months and there after once it was taken over in 2010 it offered as support for further moves and so now we have to see the same level would provide support this time also. If its yes then it would be good for bulls and if not then bears would laugh at bulls. So any break of 4500 on weekly basis we should just short as we can see a very rapid fall in the market and bulls would run for shelter.
Now we come to weekly chart which is shown in the chart below. It can be clearly in the weekly chart below indicated by arrows that the arrows are continually moving down. It moving down is clearly indicates that when every buying is coming into the market the selling is coming immediately and evey selling point lower that the previous selling area. And in august we have broken the triple bottom which is a very bearish pattern on weekly chart and the target for the same works around 4200 levels, this is the minimum target. So as the pattern is formed in the weekly pattern we can expect the target to be met.
You can also see the same reverse thing in 2010 and 2009 and the arrows are clearly showing that the buy points with black arrows and the each buy point was higher than the previous one and the break out happened on the upside and the market moved substantially before reversing. This time the break down happened after down ward arrows so we should move substantially before reversing so we can hope the 4200 to be achieved in coming months. As per this unless and other wise 5800 is taken out we cannot hope any thing for bulls.

Positive for the market:
• Nifty has exactly taken support at 200 week EMA on friday.
• Daily MACD has give a buy signal.
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: nothing much has happened as EW during the week to change any thing so it remains same as it is.

M.Sri Mahidar
Trend is Friend.
Sunday, September 25th 13.00 IST

Nifty weekly Update

Weekly technical Analysis for week ended 17th September 2011.
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 Mahidar
Trend is Friend.
Sunday, September 18th 18.00 IST

Crude

Weekly technical Analysis for week ended 9th September 2011.
The beginning of the week the market was strong and continued to move up and the end of the week especially on Friday indicated a weakness in the market and possible down sides on the coming weeks. Last week I have indicated that we can see selling pressure coming into the market at around 5200 levels and you can see that the market made a high of 5169 which is virtually nearly 5200 so it seems that technicals seems to be working for the market. Nifty has found support at around 5200 for nearly six months and last month it broke below it so now we would be getting resistance at those levels. So now we can see selling pressure at 5200 level. Any weekly close above 5200 would be a significant event for bulls. So as of now till 5200 is taken out bulls would not have comfort. As nifty has failed to move above 5200 we have all possibility of nifty moving towards 200 week EMA which happens to be at around 4800 level. Will we be seeing nifty moving down to those levels in coming weeks? Wait and watch.

It can be seen from the chart that nifty is finding resistance at around 5200 levels. There are two events that are giving resistance and why 5200 is so crucial. First you see the red ling the ling at 5200 has offered support twice and in august it broke indicating that It would offer resistance when the market moves near it and it happens to have happened now. So as far a technicals are concerned we can see nifty moving towards 4800. Another thing to watch out is that nifty has formed a head and shoulders pattern and broke the neck line in august as the H&S pattern has been formed over a period of nearly 24 months, we should have more than one reason to expect the neck line to offer resistance and it also seems to have offered resistance. The resistance line at around 5200-5300 levels. It’s a classical H&S pattern and if history is considered after breaking the neck line it moves up to or near the neck line and then the fall would be more violent that the earlier one and fall as the faster rate. So we can expect some bad days or weeks for the bulls. So be braced for it.
Positive for the market:
• Nifty has moved above 200 week EMA.
• Daily MACD has give a buy signal
• RSI has started to move up from oversold levels on daily charts.
Negatives
• Nifty is trading below 15 day, 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 below 
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 completed 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. 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.

M.Sri Mahidar
Trend is Friend.
Sunday, September 11th 21.16 IST

Weekly technical Analysis for week ended 3rd September 2011.
Last week was truncated week and it was eventful to the bulls. The market opened with a gap up opening and continued to move up during the entire week. During the current weak nifty moved nearly 300 points from the earlier weeks close. The rise during the week was too fast to be comfortable to the week. The virtual straight rise of the market is raising doubts on the strength of the rise, and pointing towards short covering rally rather than genuine buying. First indication of the strength of the market would come on weekly close above the 5200 and would be confirmed on close above 5700. So till 5700 is taken out the down side is not ruled out. So don’t be carried away by the movement of the current week. One of the noticing features of the current weeks movement is that nifty has moved above the 200 weeks EMA and bulls have proved that they are still holding strong and till its take out the range is limited to 4800 to 5200 and any change of range expansion would come only on these limits being taken out. So keep a watch on these limits carefully.

Positive for the market:
• Nifty has moved above 200 week EMA.
• Daily MACD has give a buy signal
• RSI has started to move up from oversold levels on daily charts.
Negatives
• Nifty is trading below 15 day, 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 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 have completed the third wave of the third during last week and we are in formation of 4th of the third and after which fifth of the third wave would be start which has all chances of moving below the low of the third wave which happens to be below 4700 which itself is nearly 350 points from current levels. 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 fifty 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.

M.Sri Mahidar
Trend is Friend.
Sunday, September 4th 19.12 IST