You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
Three soft trading days before
expiry is enough to misguide traders. Best thing that one can apply is to pick
a range of no trade. Those ranges are looking like 5676 to 5638. Break below
5638 will give fall of nearly 40-50 points. In alter way; cross of 5676 on
higher side will generate possibility of moves towards 5700-5720. If nothing
happening during trading hours then prefer to be silent.
One needs to observe the formation
of ‘flag pattern’ due to three days of choppy movements. General study suggest
that break of higher side of those flag pattern can give rise. Similarly, break
of low will give fall. Break below 5638 will give us 5620 first. Suppose if it
breaks 5620 then things will turn painful. We may see the beginning of selling
from these top one it breaks 5620.
Well, those were technical and now
let us see some crucial development.
- Chinese market is almost at 3.5 year’s low.
- Supreme Court will give its verdict on natural
resources. This event will be watched by corporate
- Spanish 10 year bond yield has closed 6% higher
yesterday. Is this the beginning of fresh ‘debt crisis’ in European market?
If it is coming then we must note that those will come after all ECB
efforts. We must also note that there are chances that
European drama is more concerning
that anything else for equity market. Mario Draghi has released the ‘unlimited
bond buying’ program. Just think that even after that Spanish 10 year bond
yield raised by 6% in a day. I have already shown enough doubt when market were
enjoying after ECB announcement. Let us see today. I am sensing huge – huge trouble
for European market if not sooner than later.
Wave development: -
On 20 September - There is another
factor which I cannot ignore with Elliott wave marking. It is a shooting
inflation. Suppose if we break 5449 trigger point with some ‘concerning data’
from inflation front then also we will see opening for down wave. We need to
prepare for those. Watch out for support at 5525 and then at 5449.
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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Praveen Kumar
Mail id – Praveen@viecapital.com
Mobile number – 09893369889
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