You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
I have a little different theory. I always
consider that if indices/socks test support frequently then it is a sign of
weakness. We are hitting the levels nearer to 5240 on continuous basis. This is
a sign of weakness. If trades sustain below 5238 then it will open scope for
fall towards 5149 levels. We may have intermediate support at 5190 (it is not a
dot support) too.
On higher side, 5300 will act as
stiff trading resistance. We must note that we are under performing global
market. You may accept or may reject my
views but I am strongly feeling that this under performance is due to ‘coalgate
scam’. You can observe that most of coal related sectors are falling. It can be
mining, metal, cement and power stocks which are showing weakness. It will be
the compulsion of government of India
Wave theory is suggesting that current
fall might be ‘c’ wave which might have a beginning point from 5343. It is
remarkable to see that Nifty has closed twice below 50 dma which is at 5260
levels. Basics of technical analysis suggest that if any indices sustain below
50 dma after a fall then it has a higher probability of drifting lower further.
This market may give you a sense for
rebound but rebound may not come in impressive ways. When our government should
be trying sincerely to handle economy, they are busy in handling ‘corruption’
charges. Just think what kinds of message are going to the globe.
Wave development: -
On 30 August - Firstly, I have
quoted for resistance at 5449-5450. I have already said that this is ‘most
unreliable’ rise. You can ask for reason. Just a fair question, what was the
base of this rise? Just hope and blind hope. Now we in the final count down of
hopes for Indian, European and American market. I have said this in past and
repeating again that policy makers are playing with the fire of stock market.
They are just buying time from stock market. They will not act on their words.
Earlier in the week - 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.
Earlier in the month - 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 27th
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 3rd 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
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