03 August 2012: Nifty Elliott wave analysis: Nifty remains untested @ 5257. Mario Draghi disappointment may push us for lower trades. I kept on saying from past few days about that.

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

Today’s outlook: -

When I quoted from past few days that RBI, FED and ECB would do nothing. Yes, no one has done anything after giving hopes. Now, everyone is accepting. I am strongly criticizing ECB moves for trying to send a new set of dates. I am equally criticizing his appearance on last Thursday. There is no way that he did not know what he can do and what other institutions were supposed to do. Yesterday, he kept on reading a written script. Central banks are so powerful that they can hold stock market indices to any levels and till any time. This is what I called as ‘play with the fire of stock market’.

I can at least conclude that RBI was in much better shape for not creating hopes. I can sense that if anything positive has to come then it can be from India side. Well, but we have our own problem as now IMD is also accepting for ‘drought like’ situations in many states.

I must add that I am expecting something from monsoon session in parliament. Those might be small steps but may come.

Technical charts are suggesting that if we slip below then we may see a further dip. For short term, nifty will not capable enough to cross 5350-5400 zones so investment is not going to work. Today’s closing for nifty will be decisive if we have to hit 5350 first or 5000 first.

Take a note – we need to watch European market today if they get further sell off. If comes then it will be decisive.

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.