01 November 2012: Nifty Elliott wave analysis: it gave a typical pullback toward N-Line of H&S pattern. As long as it is staying below 5630, it can fall towards 5567 levels.

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

Today’s outlook: -

I have already said for the possibility of recovery yesterday. It was the most expected pullback. It recovered from 5583 and hit a high at 5624 levels which was still below 5630. It was technically designed pullback. Now, we can conclude that 5630 is missing so fall will resume. There are chances that we will see the levels of 5567 levels. This target or support has derived from Fibonacci series. Now suppose if it breaks 5567 then it will surely ready to hit 5500 levels. I strongly believe that sooner or later Nifty will even break 5500 marks to hit the target of 5450 to 5400 levels. I have already explained those target yesterday based on H&S pattern.

Have you observed one thing? We have a consolidation of 5630 to 5730 for 12 trading sessions. I have marks as consolidating A-B-C-D-E and we got final break of 13^th trading session. It is giving us a hint that upcoming fall cannot be the normal one. Those who are buying should try being on cautious side. We need to remember that there where a phase when our market has discounted the fall of European and American market. Those days have passed and now we will see better correlation.

S&P 500 – I have said that 1475 will remain a yearly top when it was trading above 1460. I mentioned the importance of 1424 levels. Now S&P is trying to move towards psychological 1400 marks. I must say that 1400 has no technical relevance. We should expect dip towards 1385 – 1370 levels.

Now, you cannot say that we will not test 5400 of Nifty if S&P 500 slips by 2-3% more from current levels. So fall in Indian market is very likely. One can debate over duration of fall or one can talk about magnitude of recovery coming in between. Yes, it may happen but fall is expected.

United States has faced its worse natural calamity of history and it may make its impact on economy too. I always regret to apply brutal logic in stock market. We need to conclude that those destructions will generate some demand and consumption due to restructuring work.

One more thing, you need to watch out for Reliance today. I am sure you all must be knowing why I am saying this.

Regards,

Praveen Kumar