You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
The moment Nifty start trading above
5400, it will change the ‘interpretation’ of charts. There are too much news
flow and too much optimism. It is difficult to make call with great confidence.
Market is waiting for German court verdict over ESM, outcome of FOMC meet with bet
on QE 3 and IIP data in India
Technical analysis is the study to
understand mass behaviour but now a day market direction is well governed by
few events and fewer big money across the world. Charts are suggesting that
cross above 5378 can give rise towards 5400 < 5420 and then 5449 too. It is
for sure that it going to be wild two days ahead.
If levels like 5500- 5526has to come
then it can come in coming few days only. Although, I need to accept that I was
not expecting this kind of higher crossover. I was expecting this market to go
back to 5215 levels. I am puzzled with this kind of optimistic rise. This kind
of rise can leave one with just one direction and those are direction with
liquidity. I must accept that I am not trying to be optimistic as the reason
and outcome of that optimism are not good enough to say for a ‘trend’.
In the absence of policy reforms we
are bound to be laggard of global market. Look at some data, Dow Jones is at
its February month’s high but we are still 5% down from same period. Still, as long
as optimism sustain, this rise will see continuation. One must note that market
men were expecting fuel price hike by yesterday evening. It has again failed. Government
is trying to make a ‘perfect timing’ and there cannot be any perfect time for
such decision.
Wave development: -
On 30 August - Firstly, I have
quoted for resistance at 5449-5450. I have already said that this is ‘most
unreliable’ rise. You can ask for reason. Just a fair question, what was the
base of this rise? Just hope and blind hope. Now we in the final count down of
hopes for Indian, European and American market. I have said this in past and
repeating again that policy makers are playing with the fire of stock market.
They are just buying time from stock market. They will not act on their words.
Earlier in the week - Elliott waves
are turning very critical now. You can able to see that now every single wave
is contracting in nature. First rising wave started form 4531 has a life for 1100
points, and then next rising wave started from 4770 and has a life for 580
points. Next rising wave started from 5032 and has a life for 418 points
only.
Earlier in the month - 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+.
