Nifty Weekly Update - week ended 27th December 2008

As indicated in the last weeks update and also in the mid-week update, nifty failed to move and close above 3100 and corrected there after. So for the time being 3100 becomes a solid resistance and 2500 a good support level. Any break of these support/resistances has all possible chances of nifty moving atleast 500 points from those levels. so for the time being 3100 & 2500 are the levels which have to be closely to be watched. During this truncated week the markets have slightly moved above to a high of 3120 but was not able to sustaing there and started to move down from there and finally closed at 2863 a loss of around 220 points from last weeks close.

Nifty has indicated two bearish reversal patterns during the current week. One is that it has formed a bearish engulf pattern as per candlestick, which implies that the up move which has started at 2503 has ended at 3120 and we my be on course to 2503 again but depending upon the pattern which it is forming which will be discussed in the following paragraphs. The implicatins of bearish engulfing pattern will be there till nifty moves above 3120 in the comming weeks. Secondly nifty has moved below the 20 day EMA singalling that it might has started a down ward movement. From January 2008 onwards 20 day EMA is proving to be good support or resistance level. When ever indices have eight moved up or down from 20 Day EMA nifty was moving to the tune of around 400 points from the EMA. Currently 20 Day EMA is at 2920 so in very short term it becomes a very good resistance level which i thing will not be easy to cross. if nifty does not move above the 20 day EMA in the comming week we have all chances of seeing nifty at 2500 levels. So make you trading decisions accordingly.

Now we analyse the Movement of nifty according to Elliott wave principle:

I will discuss the two options which i have been discussing for the last few weeks:

Option -1 A triangle:

Under this option it appears that we might have compleated the "c" wave of a triangle ( which it self is the 4 wave from the top of january) and it appears to be forming a "d" wave which will have a minimum length of 310 points from a high of 3120 so the minimum target comes to 2810 which is nearly 45 points away from the point, So still there are all possible chance of nifty moving down to those levels. But in my openion we might see nifty moving towards the 2750 levels and then moving up. but if Nifty moves below 2730 then we have all fair chances of nifty moving towards November low of 2503. This implies that we have all possible chances of nifty moving downwards from the current levels. In this option after compleation of "wave-d" the market will raise to form "wave-e" which has all chances of moving towards 3000-3050 levels where wave-4 will compleate and the market will form wave-5 which has all the chances of taking nifty to 2200 levels.

It may be noted that triangles are the peculiar features of "wave-4" and we are in wave-4 currently so it appears that indices might be forming traingle only but the option -II cannot be ruled our in the current schnerio. if nifty moves below 2503 then option-I is negated and option -II holds good.

Optioin - II - a FLAT:

Under this option it appears that we might have compleated all the three waves of a flat i.e wave "a,b&c" which also means that we might have compleated 4th wave of the total fall from January highs and we might have just started the "Wave -5". Wave-5 should ideally go below the los of the wave -4 i.e the market should move below the october lows of 2203 so we have still 650 points to go from the current levels. this is not still confirmed but any move of nifty below 2500 will confirm the same and we might see nifty knocking the doors of 2000 this currently appers to be a frightning target, but if the pattern is correct then we has all the chances of seeing the same i have no doubt on this, so in this case also we have all the chance of nifty moving down from current levels.

Be it Option -I or Option-II we will be seeing the markets moving further down, in option -I it will be a fortnight away and in option -II we has all the chances of nifty see voilent donward movement in the current month series only.

So Trade nifty accordingly, only brave hearts can go long in this market.

Turtle Trading - 4 week phenominon
Last week i have indicated as per turtle the we should go long on movement of nifty above 2975 and also said the it is better to wait for movment of nifty above 3161 look what has happened

Go long on move above - 3120
Go short for any move below -2570
Note: the above write up is only, the interpretation as per the patterns and should not be construed as an investment advice. and the author is not responsible for any loss incurred.