Weekly Analysis- 31-01-2011 to 04-02-2011
200-Day EMA broken down last Thursday and Nifty dipped more than 3% from it last Friday as well as 2 sessions closing below it is putting a question mark that whether Indian markets are entering into Bear phase. Most Bullish started month is ending in most Bearish mood. Sentiment was at its peak in the begining and at the bottom in the last and both are extreme points,Financial markets are tend to reverse in extreme(over bought/over sold) situations.
200-Day EMA broken down in last week as well as Wave 3 trendline also tested but Nifty reversed also without breaching it. It means wave 3 and uptrend is still intact and Indian markets have not entered into Bearish Phase yet.
1-Waves Structure Chart:-
ABC correction is continued for the last 4 months and Wave 'C' corrected 100% of Wave 'A' in last week. its calculations are as follows:-
A Wave -6339-5690=corrected 649 Points
C Wave- 6181-6460=corrected 721 Points
C Wave- 6181-5512(closing)=corrected 669 Points
2 Strong support ranges are as follows:-
Strong Support Range-5349-5550
Strong Support Range-5210-5349
Fibonacci Retracement Levels
Nifty retraced and moved within 50% and 61.8% retracement levels last Friday and strong supports within this range also therefore dipping below 61.6%(5379) and then breaking down of 5210 will mean neutralising of strong supports and certain entering into bearish markets to test much lower levels. Sustaining above 50%(5562) and then crossing 200-Day EMA(5650) will mean continuation of upmove after completion of correction.
3-Fibonacci Retracement Levels Chart:-
Conclusions
ABC correction is continued and it is only correction and it also means that after its completion those bullish moves of Wave-3 will be seen about which Indian markets dreamed in the begining of year 2011. Certainly it is worrysome for the Bullishness of Indian markets that 200-Day EMA broken down with force in last week and more than 3% down move from it have been happened as well as Nifty has closed below it 2 days also. If Nifty close below 5650 on next Monday then its breaking down will be almost confirm. Sustaining below 200-Day EMA will certainly be strong indication of begining of Bear markets but Wave-3 trend line has not breached yet and Nifty reversed sharply after testing it last Friday. It means that uptrend is still alive despite breaking down of 200-Day EMA. Wave 'C' of 'ABC' correction has retraced 100% of Wave 'A' last Friday and completion of ABC correction possibility will be considered if Nifty sustaining above last Friday lowest(6460).
Strong supports within 5210-5550 and Nifty traded within it last Friday and Indian markets require complete selling patterns to break it down. Jan 2011 correction is only 'ABC' correction and no distribution pattern therefore it will be understood only correction despite breaking down of 200-Day EMA. I would like add here that no big selling pattrens on intraday charts in the steep fall of 2011. As wave 'c' has also retraced 100% therefore expected that correction will complete near the bottom of last Friday and fresh rally will be seen after completion of 'ABC' correction. No thumb rule for financial markets and if consolidation seen in the begining of week then it will be strong indication of correction completion and then 200-Day EMA crossing upward possibility will be high.
Firstly consolidations and then Up moves expected in the coming week.