10 July ’12: Nifty Elliott wave Analysis: Failure of 5343 can be confirmation of fall but keep an eye on 5260 levels first.

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

Today’s outlook: -

We have seen a close below 5290 and an impulsive low below 5260. There is no great confirmation yet to conclude that we are going to see broader trading range. If Nifty sustain below 5260 then we can expect a dip.

My point is that it should sustain below those. It will be good if you watch out those levels on 5 minutes charts. If 5 minutes chart starts closing below 5260 then it will be first confirmation of big dip.

On higher side we will have stiff resistance at 5302 and then at 5334<5343. My views are very clear, I am expecting a dip. Will it come or not that depends on the break of 5260. I do not even know how long it will take to come near to my targets.

Best technical indicator of NIFTY: (You must note it) – 200 days moving average – Watch the trajectory. After 20 May 2011, it started rising from 5 June 2012only. (It was not rising even in Jan-Feb rise). So the rally continues from 5 June 2012itself.

Wave development: -

I am revising above wave plotting a little looking on current development. I marked end of wave 3 at 5194.60 and hence wave 4 is automatically revised at 5194 (raised from 5041.70). You must be remembering that I have quoted 5090 when it was saving.

First view is wave c = 1.618* a = 5343 (Already stated on Friday too in my intraday updates.

Second view is wave c =2.618* a = 5496 (Things can never be as simple in stock market as it looks on charts.)

Take another calculation, wave 1 = 4770.35 to 4898.95 = 128.60 points (Up)

Wave 5 has to comparable with wave 1 or wave 3.

Consider first with wave 1 – Wave 5 = 2.618* wave 1 = end up 5378. So we can say that 5378 will act as tougher hurdle to cross.

Let us explain with Wave 3 – 4847.70 to 5194.65 = 329 points (Up)

76.40 % rise from 5041.70 of wave 3 = 5288, which was roughly the high point of Friday’s trade.

I like to add one more point. This rally is running from 4770. From a top you need to put support at 38.20% as reversal point. Previously it was coming at 5029, now it is coming at 5090-5100 levels. Now, support if we see a high at 5343 then 38.20% will come @ 5125.

So you should look for 5343 as first hurdle and 5378 as second hurdle. Wave theory suggests that fifth wave advance can continue till 5343 but I am doubtful about 5378. Although I should not close any views completely so I will keep 5496 in my studies.

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Thanks & Regards,

Praveen Kumar

Mail id – Praveen@viecapital.com