07 September 2012: Nifty Elliott wave analysis: I am still considering 5300 as stiff resistance. As long as it is below 5300, you cannot expect trend reversal. Will we get last hour sell off? Let us see.

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

Today’s outlook: -

EBC decision seems to be a game changer. Has it saved the upcoming ‘September fall’? Well, it is too early to conclude. We will see a higher start today but I am sure that it will be silent even at higher levels as we are having our own domestic concerns. What is my stand on ‘new bond buying programme’? I have just one question, “Will Germen authorities approve it?” That’s a key question and we will come to know later on. I am still sure that Euro zone is far away from any solution.

Based on Elliott Wave, we can get a recovery maximum till 5280-5300 levels. I can think of trading long if it tries to sustain above 5300 on closing basis. I do not think that it is a time to buy stocks. Risk is still too high. We may trade on long side for intraday but biasing can change anyday anytime. It can happen today also. I suggest that one should watch last one hour of trades very closely.

One should take a note that it is not my feeling that market has to go down. I am concluding those based on Elliott wave charts. I have already said this in past also when Nifty was above 5400. It slipped and current rise can just be a technical recovery coming on news.

Indian market will have different undertones compared to the rest part of the world. Look at ‘monsoon session’ of parliament, those are a complete washed out.

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 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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Praveen Kumar

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