You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
Nifty has moved yesterday without
even testing 5294 levels. This is not very convincing rise. It is giving us a
sense that somehow market is trying to hold at higher levels. I am still not
denying that current reverse H&S pattern can push the market higher but
there can be some doubt.
I have another important logic. If
wave ‘1’ is equal to wave ‘3’ then this kind of rally may truncate at higher
levels. I have already said on 8th August that we should expect
correction towards 5278 levels. Nifty came at 5294 and then bounced to come
near 5350 marks.
Now, as I said above that waves may
truncate then it has to come near to 5378 but stand long that 5378. Suppose if
this happens then it will be another alarming sign. If you are dealing for
intraday then you must keep this factor in your mind.
Suppose if we crosses above 5378,
then also things may remains same. It will count as five wave rise. Take a note
that I have already projected that current rising wave will be lesser in
magnitude.
Money flow is still very strong from
FII side. We cannot ignore this factor.
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).
Wave development: -
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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Thanks & Regards,
Praveen Kumar
Mail id – Praveen@viecapital.com
Mobile number – 09893369889
