06 August 2012: Nifty Elliott wave analysis: Expect support @ 5164 and look for the most crucial 5279 levels. Will we able to sustain above 5279? Firstly it was Mario Draghi and now Angela Morkel repeating same statement.

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

Today’s outlook: -

We have a massive rally in European and American market on Friday night. I am already criticizing politicians and policy makers for their high-talk language on economy. After Mario Draghi now Angela Morkel repeated the same statement that she will do everything to save euro. This makes the market optimistic again. When globe start moving higher on words only then why to act on words? It is a traditional political approach.

I can criticize these people but I cannot stand my trading positions against those. I am again repeating that European people are trying to convince on a matter which they cannot solve.

We have some greater challenges on domestic front. Monsoon is not only turning critical but also extremely threatening. I have already forecasted for WPI Inflation @ 11-12% and food inflation @ 15-18% by November 2012. I am forecasting those figures from the month of March.

For today, we will have trading support @ 5190 and 5164. On higher side, there are few crucial levels, 5258 and 5279. Will stand above 5279? Let us see.

Wave development: -

Nifty has a low at 5032 on 27^th July 2012. As of now we can sense that there is a beginning of new wave which probably is going to be a rising wave. Take a note that we have seen a completion of up wave which has started from 4770. It is named as 1-2-3-4-5-a-b-c in above chart. On 3^rd August 2012, we got a low of 5164.65 which is exactly 38.20% against the rise from 5032 to 5246.

This is encouraging with few challenges on higher side. Every wave trend has some relation with its previous wave or waves in terms of ratio. I myself have said that this is going to be most unreliable rise looking the reason of rise but when I have to work with charts then I am forced to keep those away. I can tell you that charts are still saying that I am not wrong in a big way. Magnitude of upcoming wave will be lesser compared to past few waves.

Charts are saying that if we manage to close above 5279 then we can conclude for the formation of ‘reverse head and shoulder’ pattern. It will have n line @ 5279. You can say for the rise which should be equal to 5279 – 5232 = 247 points. It can give me a target of 5526. Well, it is looking easy but it will not be easy. We can say,

Beginning point of wave = 5032.40

Wave 1 = 5246.35

Wave 2 = 0.318 times of wave 1 = 0.318 times of (5246.35-5032.40) = 5164.65

Those who are bullish in their nature should keep their fingers cross for 5279+.