16 August 2012: Nifty Elliott wave analysis: It has a crossover of 5378. If it sustain above 5378 then 5400 is achievable. It seems that extension of rise is very much possible now for targets 5450 < 5500< 5526. Condition – Global market can see silence near resistances?

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

Today’s outlook: -

Nifty has successfully crossed 5378 in the last trading session. Unfortunately, global market is turning on silent note and creating doubt over further expansion of rise. Well, but charts are still suggesting for a rise. It will be a rise that can be impressive for traders. I have already expressed by views for a move towards 5526 earlier.

Wave charts are suggesting that if we send time above 5378 then we will have few likely targets. Those can be 5400 and then 5450. I am expecting a trading support at 5350 levels. There may trend dictating stocks. One should focus towards performing index heavy weight stocks. It is equally true that frequent weakness can it weak stocks time to time.

Now let us talk about reforms in India. I have already quoted that I am not expecting anything from current government. They are showing class of inactiveness. It was reflected in prime minister’s speech. He still believes for unrealistic growth. If you are cheering from lowered inflation data then I must tell you that those data has higher reasons to be worried.

I am repeating once again that if government fails to lower fiscal deficit then we are moving towards real serious troubles. We can enjoy the rise in indices and stock price as long as money flow continues but some days above factor will come into action.

Wave development: -

I like to add few more things for “reverse H&S”. Length of head = 5279 – 5032 = 247 points. Confirmation point will be one-third of head length i.e. 247/3 = (~) 83. It means 5279 + 83 = 5361. So we need to see the one-third confirmation rule to bet for 5526. As it is visible on daily chart so we need to see this close to close basis. (This is a “must know” concept).

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+.

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