You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
Nifty has not sustained below 5240
levels with great comfort. It was just a moderate recovery after fall but it is
not sufficient to conclude that recovery is coming. I still feel that 5300
levels will act as good trading support. I am already saying that trades need
to sustain below 5240 levels. A break or trades below 5240 for few minutes will
not help.
Based on “Elliott wave theory”, I
plot the beginning of wave ‘b’ at 5343 levels. Fibonacci series were suggesting
for support near to 5240. This support has broken twice in two days and next
expected support should emerge only near to 5149 levels. This support will
emerge on minimum retrenchments of waves. This fall may extend further. As long
as Nifty is standing below 5343, I can expect for the continuation of wave ‘c’.
It seems that it was the talk over
CRR which has pulled banking stocks higher but those talks are far away from
reality. In my views, banking stocks and metal stocks are still weak. I can
just say that those are getting some pause for consolidation. The outcome of
this consolidation will be fall again. I will use higher levels to short only. As
said earlier that rise above 5378-5400 will not be ‘reliable’, so I am
repeating again that fall can hit the street. One day rise cannot change the signal
from this kind of levels. So, do not buy, do not buy, do not buy.
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+.
Our intraday update will begin from
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