19 October 2012: Nifty Elliott wave analysis: Forming an indecisive “W” pattern. Trading range of 5730 to 5630 will remains critical. It is still not clear about the direction of break. Even after gains FII and DII both has net sell figure for last session.

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

Today’s outlook: -

I said that 5630 is now ‘make or break’ levels. Few days back also I quoted that Nifty is bound to see pullback as long as it is saving 5630 levels. From higher levels, if it fails to sustain above 5730, we are bound to see selling. We can conclude that actions has restricted in 100 points of range from last eight trading session. I need to be honest that it is not easy to take directional call in this kind of market. Those are officially confirmed by charting pattern. Those who know technical must be aware about “W” pattern. I am explaining also. Some can name it as double – bottom and triple-top pattern. Bears took two attempts to for tow lows and bulls put three attempts for three top but both failed. Simple rule of technical analysis suggest that one should not deal in this 100 points of range. Characteristic will be – you expect up, it will go down and you expect down, it will go up.

It is a better idea to wait for the break of extreme ends of range. If you are taking buy or sell then those might not have better technical confirmation.

There is another way to read the current structure. Those call called “bar set up’. On 8^th October it has formed a range of 5752 to 5666. Take a note that we never able to move out of those ranges after that on decisive basis. Bar set up theory suggest that until we break on any side we cannot claim for direction.

Now, then which study can give me direction? Well, there can be answer based on Elliott wave theory. Those are suggesting that this is the range of consolidation. This consolidation can be 5 waves or 8 waves. We have completed 4 waves till now. We may see the beginning of 5^th wave on down side. It is early to conclude and so I can be better position to answer those after today’s closing levels.

S&P 500 – I informed that it has formed a buy with a save of 1424 levels. This buy was applicable for the target of 1460 which it has already done yesterday. Now it is again in the zone of resistance near 1475. Failure of 1475 will declare this as yearly top. Today is 25^th anniversary of single day biggest drop of Dow Jones.

Another important point to note is google and Microsoft result. Both were looking equally horrible. Was that the base of rally? If yes, then market men need to think what they are doing.

We got something on EGoM over telecom policy yesterday. Those push many questions rather than answer. I can say it is still unclear. This is just my view as I am not telecom expert. Let us see how stock will react.

Regards,

Praveen Kumar