24 August 2012: Nifty Elliott wave analysis: It has just missed 5450 as expected and then a fall. Now fall will continue up to 5340 if breaks 5390. I am expecting that 5450 will remain untested.

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

Today’s outlook: -

Nifty has slipped after hitting a high at 5448.60 levels. I have already quoted that it may try to take a move toward 5450 if stand above 5400. Well, now we need to focus on what is going to happen next?

I have also quoted that current rise would be ‘unreliable’. Look at global market. US market has slipped as hope for stimulus is dimming now. Even in India, hopes of reforms are going on back seat. One must note that it was rally driven by ‘hopes’ and ‘only hopes’. I have already warned too many times that policy makers are playing with the fire of stock market. These people can talk a lot but will do nothing.

Elliott waves are turning very critical now. You can able to see that now every single wave is contracting in nature. First rising wave started form 4531 has a life for 1100 points, and then next rising wave started from 4770 and has a life for 580 points. Next rising wave started from 5032 and has a life for 418 points only.

This kind of contraction is indicating that everything is not right in stock market. Although I cannot specifically point out what is wrong but charts are telling me that current wave formation can result a massive dip. When will it start? We will get those answers very soon. Who knows it might have already started.

For today, break below 5390 will give you levels of 5340 levels. I am strongly criticizing the way government is moving with its economic polices. That inactivity may cost a lot to stock price in coming days, weeks and months.

 

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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Thanks & Regards,

Praveen Kumar

Mail id – Praveen@viecapital.com

Mobile number – 09893369889