31 October 2012: Nifty Elliott wave analysis: RBI action gave reason for Nifty to break 5630. It has broken and closed lower. Now we can expect more fall. Technical support comes @ 5567.

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

Today’s outlook: -

From past three – four trading sessions I was discussing about a pattern which was ‘flat top and ascending lows’. It was a bearish signal and hence we have seen lower break. Yes, we betted for short trades on many stocks. It was explained based on RSI also which was giving all sense of weakness. I need to be honest that it was perhaps most patience testing market for direction. So, finally it seems that we got the direction.

I have already mentioned that RBI can have a room to give only 25 basic point CRR cut. Although, I still believe that CRR cut cannot help anymore. Note that we got 100 basic point of CRR cut and still repo remains unchanged. It’s really tough to be RBI governor. It is easy to sit in drawing room and do analysis but it is really very tough to throw some good plan to handle current situations.

For stock market, Nifty has broken 5630 and Sensex has broken 18500 levels to open newer levels for downside.

It was Elliott wave theory which gave me the hint of this fall. Now, it will be H&S pattern and Fibonacci series which can give me probable targets. Fibonacci series is suggesting for immediate support at 5567 levels, which can be tested by today only. Final support can emerge as low as 5415 levels only. On other hand H&S pattern is giving some basic calculation. Length of the head is 5815 – 5630 = 185 points. So the target should be 5630-185 = 5445. So anyhow we may move towards 5450 at least.  

There is another sense for H&S pattern. Nearly 80% of the time, stocks or indices try to retest N-line for once. It is suggesting me that Nifty can face resistance at 5630 levels. You can ask, will it come? Well, I am not very sure but chances are there for a bounce towards 5630. I am still quoting that it may come but it is not a compulsion to come. A price break down has already come and it will give its full impact.

Conclusion – we can expect a dip towards 5567 now and we will have technical resistance at 5630-5650 levels. A rebound is not a compulsion but it may deserve to come.

Regards,

Praveen Kumar

30 October 2012: Nifty Elliott wave analysis: Nifty has traded near lows’ but still not breaking 5630. Market is waiting for RBI monetary policy review today. Will it break 5630 marks? Let us see.

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

Today’s outlook: -

Nifty is coming towards critical 5630 marks but never broken. It hit a low of 5641 on Friday, 5645 yesterday. We spend 14 trading sessions in the same range of 5730 to 5630. We have RBI monetary policy review today. I must say that market has denied too many negative news flows in recent past. Nifty has digested the fall of reality stocks, banking stocks and massive dip of Dow Jones. Let us look consolidation in another way too.

We have 14 range bound session after hitting top. I can assume that it must have thrown all weak bulls of the market. Now it is just waiting for some trigger to move northward. It can be RBI monetary policy. Alter way, if rate cut does not came as the market is wanting then it will break 5630 today. We all know what can happen after the break of 5630.

So finally, we still need to wait for 5630. Now, what to expect from RBI monetary policy? I read yesterday’s economic survey report. They have reduced GDP target substantially from 6.50% t 5.70%. Paper has shown concerns over inflation and growth too. Unexpected is nothing but I am sensing that we will not get any rate cut. Even if we get then it can just be 25 basic points of CRR cut. 50% traders are expecting 25 basic point repo rate cut and 25 basic point CRR cut.

What is meaningful? Cut in CRR does not have its meaning. Without a cut in repo rate you cannot justify these actions. If RBI wants to cut any rate then it should be repo rate or both. Cut only in CRR is just not making any sense.

Apart from this, I am lot scared about Kelkar committee report. Our market might not be ready to digest higher fiscal deficit. As of now market has not reacted yet.

Technical charts are stopping all it’s conclusion at 5630. So I have nothing new to add. We might see silent opening and silent trading before RBI policy.

Have a great trading day,

Regards,

Praveen Kumar