NIFTY: 16 May 2012: Hint for another gap down and all eyes must be again on 4850. As said yesterday, Ghost of Greece is back – moving in re- election.

I have already quoted yesterday that if we save 4850 then we may see a rebound. We got that and Nifty rebounded from 4868 to o4955 which was a good 87 points of rebound. I have twitted yesterday that Greece will be in re-election and now within 24 hours we are getting those news flow.  

Shall I short after gap down?

My answer is again no. Wait for first 15-30 minutes and focus on levels of 4868 and 4850. SGX NIFTY is indicating for massive gap down but we may not see that kind of weakness. I am expecting Nifty to open near to 4900.

Ratio analysis is suggesting few important levels.

• 4858 – If I am assuming first reaction after sharp rise. It has ended at 5171 and then we have seen 5499 as high. It was acceptable reaction till that time as it was just a-b-c wave of correction after rise. Problem came after that and we have seen a dip from 5499 to 5136 which was actionary dip (which kept on trading in a range to form triangle). Hence, it was the beginning of down wave. It took real long time to break the low of 5136.
• 76.40% of those correction levels below 5136 will end up @ 4858.

Although, I am not trying to be extra ordinary bull but I am expecting some upside. This rise should try to move towards 5000 if not crossing those. Resistances will be at 4971 (-4976) < 4986 < 5000 (5040)

One can utilize initial dip on Nifty Future if it really open at 4870-4860 (as getting hint by SGX), keep stop loss at 4850 to some rebound.

• Suppose if it breaks 4850 – then expect a dip towards 4790

(Good if we open with gap down as it will reduce risk to some better levels)

I was expecting bounce in past few days but none has sustained more than 24 hours. We must be close to a bounce which should sustain for 2-3 days.

It is not looking like to cross 5040 in any bounce but Nifty should come closer to 5000 levels. It is also true that we have see fall again from those levels also. One must note that correction is integral part of any trading direction. If we are falling in weakness then also we have see some correction.

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Praveen Kumar

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