26 December 2012: Nifty Elliott wave analysis: Nifty came closer to 5838 zone again. Decisive push will result fall towards 5770. Technical almost remains unchanged. Stiff resistance will emerge ay 5900.

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

Today’s outlook: -

Global market is trading with silence in holiday season. While I am compiling this article, I have not seen anything positive on fiscal cliff in USA. It was impact of US market that even Nifty closed with some softness in the last trading session. Now we are just a day away from derivative expiry of December month contracts. If we do not go lower then market will be volatile in small range.

Trading ranges are already shifting lower from past two trading weeks. I am already mentioning the negative divergence on technical indicator MACD. Most important is that our market is almost remains unchanged for December month. We have hardly moved by 100 points. All this has happened when FII pushed more than 12k crs in cash market. It is not small sum of buying but indices are not lifting yet.

At the beginning of the month fund flow was positive indicator but now it is throwing concerns. Global money participation will be low due to Christmas vacation and this can increase volatility. An hourly chart has formed an H&S pattern with length of the head as 100 points of Nifty. I said many times that one should keep an eye on 5838 levels.

There is still a big question. Will this market move? I am afraid that till now it is trading on support but not giving anything great to break trend. It seems that development over fiscal cliff will provide a trigger but market has already discounted many such triggers. We need to note that we are almost not going to get any positive news flow.

Conclusion Nifty: One must have an eye on 5838. If it trades below 5838 for just 5 minutes then we can see higher degree of fall. You can conclude that if we start trading below 5838 then this month expiry will end up on nervous note. Technical resistance will be at 5888 to 5900. I have quoted the importance of 5888 many times in past. If I need to make some approximation then I can conclude that break below 5838 should give 5823 to 5815. After a pause it can see further fall.

S&P 500 – It came at 1426 on closing basis. Technical charts are suggesting that break below 1418 will give a trigger for 1400 marks. I believe that breakdown has already occurred. It is the matter of time for break. Let us see if anything comes on fiscal cliff.

Regards,

Praveen Kumar