Sunday, August 7, 2011
Technical Analysis of Nifty
Markets are now poised at critical juncture in Long Term time frame . News flow and associated reactions may muddle our vision . Lets objectively analyze it Technically so as to try and get a probabilty that will help us navigate the short term moves keeping the Long Term TF in hindsight.
I did the last Long Term Analysis in Jan. this year and suggested coming weakness based on Technicals. - Click Here
1. Moving Averages :
The Long Term Moving Averages are clearly Bearishly aligned with a 50-200dma giving a Death Cross. No Upmove of consequence will unfold trading below 200dma as of now.
2. Trendline :
The Weekly chart shows a breakdown of a Long Term Trendline that was holding Support since Nov. 2009 and never had been voilated on closing basis. Last Weekly close was a 52 week low close , lower being that of the week ended on 11-06-2010 .
3. Indicators :
The Indicator on Weekly chart is on sell mode (above) and that on Monthly chart is also on Sell mode (below) . The prices on Monthly basis have closed below mid B.B. for first time in many months and now may target lower B.B. near apprx. 4800 level .
4. Fibonacci Levels :
The retrace level of the total Upmove since 2252 - 6338 ( 2008 lows till date ) shows that we may be approaching the 38.2% level near 4800 apprx. in this leg of downmove.
5. Pattern :
The Pattern visible in above chart is that of a Descending Triangle that we have been following on weekly basis also. The Pattern is Bearish in nature and generally gives a breakdown below lower Trendline . It had violated the trendline in last trading session but closed above it. Height of the Triangle is apprx. 1140 pts. if breaks down below 5200 ,it will have a target of apprx. 4060 !!!
6. Elliott Wave Analysis :
Please check out the EW count and Insight that I have been following on Long term charts - Click Here
If we go by our Preferable count of Double zigzag then we are in wave C of second zigzag Y.
Now if wave C is equal to wave A of 745 points apprx. then we get a target of apprx 4995
and if wave C goes to 1.62 times wave A then it will be apprx. 1210 pts and target apprx 4530
Any trading below the 4530 level of Preferable count will make the alternate count logical.
If we go by Alternate count of a single zigzag , then also we are in wave C but the targets will be
If wave C equals wave A then C will be of apprx. 1160 pts and target 4785 appx , this is also near 38.2% fibo target.
and if wave C is 1.62times wave A then it will target apprx. 4065 which is the target of the Descending Triangle pattern.
The above Long term analysis will give signals for invalidation if -
1. Prices start trading above 200dma
2. There is a Monthly closing above mid B.B. near apprx. 5550
3. The Descending Triangle gets busted . This Pattern has a 16% failure rate which should be kept in mind. Close above the falling Top Trendline will confirm it.
1. As of now 4800 can be a conservative Target which has a high probability of being met.
2. Will the Market stop at 4800 levels when this has been so much anticipated and talked about level ? I think 'No' in case we get to it.
3. In case of Invalidation signals , forget everything and just trade in Opposite direction with Targets of a New all time High in sight. ( We will fix the counts later :))