22 June 2012: Nifty Elliott wave analysis: Rumors or bad news flow, but if it saves 5090-5080 after gap down then we may see shocking move again. Expect weakness below 5080 only.

You must read previous articles and watch above chart carefully to understand this article completely.

Important development of charts –

• Nifty has 38.20% resistance @ 5209 (from 5630 against the rise from 4531 to 5630). We have seen fall from those resistance with high @ 5191.
• 5029 – It is 38.20% of rise against 4770 to 5191.
• 5080 – Mid point of 5631 to 4531, hence a critical support. Some retrenchment is giving 5090 also. So the range is 5090-5080 as support.  

I have already discussed the importance of 5090-5100 levels many times in past few days. Even yesterday it kept on saving 5090 and rebounded in its own style. It was backed by rumors but charts have its own direction. Break below 5080 will lead us towards 5040 to 5029 levels.

One must note that the rising trend which begins from 4770 can be concluded as end only and only if it close below 5029. As long as 5029 sustain we can see what we are witnessing now, a frequent pullback by bulls.

SGX NIFTY is right at 5120. Yes, US market has slipped by 2% last night. It was the dual impact of fear of slow down and downgrade of prime banks. Do not worry; even our own fundamentals are as bad as those. It is different issue that we are still raising. One must look as USD vs INR equation.

So, after a 50-60 points of GAP DOWN one should not be tempted for shorting. If this gap does not fill up then it will be named as bear gap down but that can be confirmed only during trading hours.

After gap down, one must again focus for the support at 5090 to 5080 levels. It is a very simple principle that after gap down one must be very careful. Today is going to be very important day. One must be careful about volatility and one sided move in second half, may be after 2 pm. Just like yesterday.

Charts are still suggesting unexpected will be nothing. It is trying to move higher. I am considering 5190-5209 as only crucial resistance. Do take a note that for intraday 5134 < 5156 may again play a major role. I have already given this in past few days.

Break and trade below 5080 will surely push us lower today.

I have to give you alter sense, suppose if we kept on trading above 5040-5029 after all odd then it must force every technician to bet for the fresh wave of rise which can end up somewhere in this way –

5040 + 420 (rise from 4770-5190) = 5460. Or it can move 38% (5200), 50% (5250) or 62% (5300) advance pattern. These are possibilities and I am not very sure about that. Let us see.

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Praveen Kumar

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