24 July 2012: Nifty Elliott wave analysis: Have a look at 200 DMA which came at 5100 now. As long as we sustain above 5100, expect some recovery. Still recovery will not sustain in coming days.

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

Today’s outlook: -

From past more than one month of trades, I gave lot of importance on the trajectory of 200 DMA. It starts rising from 5^th July. Now we are close to 200 DMA again. In past also, I have quoted that trading near too 200 DMA can be only the sign of weakness. Although it can result few rebound.

Yesterday, I gave a range of 5127>5118. We run in those ranges. I have not opted to forward short yesterday even though DOW FUTURE was negative by 140 points. So, for today: -

We may come to test 200 DMA but break is not likely to come without a rebound. Magnitude of rebound should be towards 5160 levels. Cross over may give us even 5200. Do not forget that we are very near to derivative expiry.

Break below 5100 will give us 5060. Take a note that no rise is going to sustain for short term. Europe problem or India problem but we will be forced to see a fall. So today should be day for bounce. Let us see how much comes.

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 2012 only. (It was not rising even in Jan-Feb rise). So the rally continues from 5 June 2012 itself.

Wave development : -

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 so 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 previous day 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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Praveen Kumar

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