Weekly Analysis- 14-02-2011 to 18-02-2011
Waves structure of Indian markets is as follows:-
Nifty topped at 6357 on 08-01-2008 and Indian markets corrected that rally which started on 28-04-2003 from 929.50. 2008 was correction year and Nifty corrected in 5 waves upto 2252 on 27-10-2008. Indian markets remained range bound and consolidated 5 months within 2500-3100. Fresh rally started in March 2009 and:-
1- 1st impulsive wave begining from 2252(27-10-2008) got confirmation.
2- 1st wave finished at 4693 on 12-06-2009 and 2nd corrective wave started.
3- 2nd corrective wave finished at 3919 on 13-07-2009 and 3rd impulsive wave started.
Wave-1 gained:-4693-2252= 2441 points
As per Eliot Wave theory "Wave-3 can not be shorter than both wave-1 and Wave-5 therefore Wave-3 was bound to gain minimum points of Wave-1(2441)
Wave-3 minimum target was:- 3919(started from)+2441(minimum gain)= 6360
Wave-3 tested 6339(21 points short from its minimum target) on 05-11-2010 and "ABC" correction begun. Although Nifty could not got its minimum target(6360) and remained short by only 21 points but in 2420 points rally mere 21 points shorting is negligible and:-
4- 3rd impulsive wave termination at 6339 is confirmed on 05-11-2010 and 4th corrective wave started same day.
1- Waves Structure of Indian markets Chart:-
5- Wave-4 corrective wave has to correct 2440 points up move of Wave 3 and Fibonacci retracement levels of Wave-3 are as follows:-
38.2%- 5414(Has been corrected)
50.0%- 5129(Has to correct)
61.8%- 4843
70.7%- 4628
76.4%- 4490
78.6%- 4436
88.6%- 4194
2-Fibonacci Correction levels of Wave-3 Chart:-
6- Wave-4 is correcting in "ABC" waves and according to "ABC" waves structure correction Targets are as follows:-
1- 'A' Wave- 6339-5690= 649 points down
2- 'B' Wave- 6181-5690= 491 points UP
3- 'C' Wave- Target-
1-6181-649(100.0% Retracement)=5532
2-6181-897(138.2% Retracement)=5284
3-6181-974(150.0% Retracement)=5207(Has been corrected)
4-6181-1050(161.8% Retracement)=6131(Has to correct)
3-ABC corrcetion Chart:-
Conclusions from Waves structure Analysis
Termination point of Wave-4 and begining of Wave-5 level has to be acquired. Possibilities are as follows:-
1- Wave-3 Fibonacci retracement 50% level is at '5129' and "C" Wave 161.8% Retracement target is at '6131' therefore "Wave-4 termination snd Wave-5 begining possibility near 5130 is high."
3- As Nifty got good support near 5200 and reversed sharply from 5177 on 11-02-2011 therefore termination of Wave-4 and begining of Wave-5 can not be ruled out last Friday.
Either Wave-5 has been started last Friday after completion of "ABC" correction or will positively start from 5130 which is support from 2 different technical angles.
Weekly Indicators and Averages Analysis
1-Averages- Nifty is below all the main averages. It is showing complete weakness because Nifty is below 55-Week EMA AND Nifty has to sustain above it for any sustained rally.Rally begining will get confirmation after moving above 5-Week EMA. As showed complete weakness therefore suggesting minimum a relief rally.
2-Bollinger Band- Lower band is sliding with the fall of Nifty value and Nifty is below lower band for the last 2 weeks. As strong buying may push if price is well below lower band therefore showing up moves possibilities.
3- MACD- Both lines are sliding in near zero line and gap increased between both lins therefore upmoves indicating to converge both lines.
4-ROC- Positive divergence in oversold zone therefore suggesting upmoves possibilities
5-RSI- In oversold zone and moved up last Ftiday therefore suggesting upmoves possibilities
6-Slow Stochastic- Very short term indicator and not habitual to live much time in oversold zone but stayed for the last 4 weeks and signalling rally possibility any time
7-William %R- Very short term indicator and not habitual to live much time in oversold zone but stayed for the last 5 weeks and signalling rally possibility any time
4- Weekly Indicators and Averages Analysis Chart:-
conclusion from Weekly Indicators and Averages Analysis
Completely oversold Indicators and Nifty below Bollinger Band are showing pull back rally rally and bounce back confirm possibility. Expected that up moves will be seen in Indian markets for indicators to recover and normalise oversold indicators.
Daily Indicators and Averages Analysis
1-Averages- Most shorter term averages are below longer term averages and Nifty is below all. It is showing complete weakness therefore suggesting minimum relief rally.
2-Bollinger Band- Lower band is sliding steeply with the fall of Nifty value.All upper,middle and lower are moving downward therefore confirming complete weakness and signalling minimum relief rally to recover from oversold situation.
3- MACD- Both lines are sliding in oversold zone and MACD line is below Average line. No positive divergence but both lines are in deep oversold area therefore indicating minimum small upmoves possibilities.
4-ROC- Positive divergence in oversold zone and moved up last Friday therefore suggesting upmoves possibilities
5-RSI- No divergence in oversold zone and moved up last Friday therefore suggesting upmoves possibilities
6-Slow Stochastic- Very short term indicator and not habitual to live much time in oversold zone but stayed for the last 25 sessions and signalling rally possibility any time
7-William %R- Very short term indicator and not habitual to live much time in oversold zone but stayed for the last 25 sessions and signalling rally possibility any time
Daily Indicators and Averages Analysis Chart:-
conclusion from Daily Indicators and Averages Analysis
Completely oversold Indicators are showing minimum a pull back rally rally or bounce back possibility. Expected that up moves will be seen in Indian markets for indicators recovering from oversold zones.
Supports at Crucial Levels on 11-02-2011
1- Strong Support at 5210
2- Support at Wave-3 Corrections Rising Trend Line
6-Supports at Crucial Levels Chart:-
Conclusions (After Putting All Studies Together)
Weekly and Daily indicators are oversold therefore Pull Back rally/Relief rally/Bounce back is very much due and that will be seen in the coming week. Nifty got support near 5210 and at Wave-3 Corrections Rising Trend Line last Friday therefore Wave-4 "ABC" correction termination begining of Wave-5 from here possibility is high.
Although 5130(reasons already explained above) is technical possibility but after finding good support near 5210 in last 2 sessions it seems very much possible that Wave-5 has begun last Friday and fresh rally will spark in the coming wek.
As sentiment heated therefore intraday correction expected on Monday but Rally will be seen finally.
