You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
I kept on quoting in last many
trading sessions that rise in the zone of 5378 to 5400 will not be easy. Nifty
hit a high at 5399.95 on Friday and then turn back. I have quoted about the
importance of 5340 support. Nifty has recovered form those support. I am
repeating that trades below 5340 will be the first sign of weakness from higher
levels. Now I am sure that you must have understood the importance of 5400
levels.
Current wave trend is suggesting
that 5 waves of rise might see completion. You can ask about the formation of
‘reverse H&S’ pattern. It has one-third confirmation above 5360 but that
need to sustain. I am sensing that it is failing. Well, as usual wave theory is
giving me a better indication.
When resistance is defined at 5400
then we must discuss the support on fall. (Take a note that above 5400, all
these study will be invalid). First point of weakness will be just below 5340.
We may see a drag towards 5280 (~5278) and then at 5240 levels.
Before you conclude anything great
for trading then I must inform that we cannot get rid of choppy market
movement.
Wave development: -
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).
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
