Nifty Update for week ended 20th December 2008.

Nifty has been moving as indicated in the last weeks update. Nifty during the week has moved in the range of 2900 to 3100 and finally closed at 3077 a rise of 5.31% over the previous week. This is the second consecutive week on week rise. It may be noted that nifty has not closed postively for more that two weeks consiqutively starting from the month of August 2008. It was in july where the nifty closed in positive territory for five consiquetive weeks. So odds are favoriting bears for the comming week on this basis only, but technically we have to go deep into the patterns and the trend which is arising.

One point which is to be noted is that nifty has been staying above 20 Day EMA for the last eight days and has just found resistance at 50 Day EMA which is between 3075-3100 levels. From January 2008 onwards it has found a very tough resistance at 50 Day EMA and 100 Day EMA. when ever it has moved above the 50 day EMA within week or two there was a free fall be it May or August 2008. So we might face a good amount of resistance at 50 Day EMA and at 100 Day EMA. So the current resistance levels are 3100 and 3450-3475( 100 Day EMA). So these points has all the chances of finding a good amount of resistance. between these two also we have resistances at previous hights of 3161 and 3240. So currently nifty is heading towards crucial resistances levels which might determine the fate of the market for the comming months. So we have to be patience and wait for the markets to break above these levels to make any investment/trading decision. So all longs should be protected with a stop loss at 20 Day EMA, which is at 2900 levels. Any move below the 2900 has all the chances of nifty touching its Nov lows of 2500. So now you can decide on how to trade for the current week.

Any move of nifty below 3000 level should be taken as first warning signal and any move below the 2900 levels should be taken a confirmation the the down trend towards 2500 levels.

it can be seen in the above chart that nifty has been finding support at the sloping trend line drawn from the lows from January 2008 and it has broken it in october carnage and now it faces resistance at this level which is at 3100. In the month of november it has failed to raise above this level and made a high of 3240 and currently it is exactly at that level. It has finding it difficult to move above this level for the last two days as nifty is hovaring between 3050-3100 level and not able to move above it so, currelty 3100 becomes a very crucial levels for the markets for the comming week, and it has to be closely watched to make a investment/trading decision.

Another point to be noted by the movement of nifty on friday is that nifty has fomed a "star" pattern as per the candle and stick pattern which indicates indecisiveness in the market and generally whenever star patterns are formed they indicate the end of the current rise and prices generally reverse from those levels. But if the high of the same is voilated then the trend continues. The high of friday was 3106, if nifty closes above 3106 then the implications of the above pattern are negated. so better watch out.

Last week i have indicated two patterns as per elliotte wave option-I being a triangle and Option -II a flat and this week also these pattens hold good.

In the option - I which is a triangle we might be forming "c" wave which will complete soon and any move above 3240 will negate this view. if wave "c" compleates at this level we might see nifty moving towards 2750-2800 levels where from it will rise towards 3000 where in the wave-"e" will end and where in wave-4( one step higher will end) and we will be starting wave-5 which will take nifty towards the october lows.

I case of Option-II which is a flat it appears that we might be forming "c" wave which is the final wave of the flat and after which wave-5 will commence which has chances of seeing october lows. In this case nifty has chances of moving towards 3240 and then reversing.

So better watch out for the choppy markets in the comming weeks are the markets are entering a zone of heavy resistances one after another so be cautious in your trade.

Current resistances: 3100.3161,3240

Supports:3000 and 2900

Turtle Trading:

Last week i Have indicated that as per turtle trading you may go long on close above 2975 and on monday if any body has taken a long position on move above it he may be sitting on a good profit.

Action buy initiated on break above 2975

Average true range is at 120: considering this Increase you positions on close above 3215 only

close your position on close below:2850

Go short on close below: 2502

Note: the above write up is only, the interpretation as per the patterns and should not be construed as an investment/trading advice, and the author is not responsible for any loss incurred by investing/trading in this regard.

M.Sri Mahidar

Sunday: 21st December 2008 time 19.00