31July 2012: Nifty Elliott wave analysis: Suggesting for a test of 5228, once it is standing above 5192. Wildness is expected near resistance @ 5228 & 5260. We may see fall from high.

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

Today’s outlook: -

Hope created by all central banks is still dominating the global trend. Well, from today, it is the time for central banks to act on its ‘words of optimism’. Our market has also bounced on the hope of stimulus in Europe (especially to Spain and Italy) and USA. Will those come?

Good part about India is that we have no great expectation from monetary policy review. I can still sense that stock prices are reflecting some optimism.

I have no great idea about working resistances. Technical resistance is at 5228 and then at 5260 < 5278. We may see rise to continue till RBI policy review. Core of my study is that we may see fall from higher levels in second half when it will unexpected.

Technical charts are suggesting that Nifty will have support at 5160-5150 zone. Take a note that EGoM will meet today to discuss ‘drought situation’ in India. I feel that ‘drought package’ to different states can be as high as 50k crs. It is another medium term concern.  

Wave development: -

First view is wave c = 1.618* a = 5343 (Already stated on Friday too in my intraday updates.

Second view is wave c =2.618* a = 5496 (Things can never be so simple in stock market as it looks on charts.)

Take another calculation, wave 1 = 4770.35 to 4898.95 = 128.60 points (Up)

Wave 5 has to comparable with wave 1 or wave 3.

Consider first with wave 1 – Wave 5 = 2.618* wave 1 = end up 5378. So we can say that 5378 will act as tougher hurdle to cross.

Let us explain with Wave 3 – 4847.70 to 5194.65 = 329 points (Up)

76.40 % rise from 5041.70 of wave 3 = 5288, which was roughly the high point of previous day trade.

I like to add one more point. This rally is running from 4770. From a top you need to put support at 38.20% as reversal point. Previously it was coming at 5029, now it is coming at 5090-5100 levels. Now, support if we see a high at 5343 then 38.20% will come @ 5125.

So you should look for 5343 as first hurdle and 5378 as second hurdle. Wave theory suggests that fifth wave advance can continue till 5343 but I am doubtful about 5378. Although I should not close any views completely so I will keep 5496 in my studies.