01 February 2013: Nifty Elliott wave analysis: I have already expressed my view or a move towards 20 EMA. We are now on the verge – “Make or Break”. Spending time below 6020 will trigger sell off. So, short term top forming or not?

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

Today’s outlook: -

On 31 January 2013, FII bought INR 958.93 crs and DII sold INR 863.60 crs.

Nifty hit 6000 marks on 2^nd January 2013 and till yesterday also it was just at 6034. I have already said that this is “the short term top formation”, while most were betting for further rally. Can I say that I am right when Nifty is only 70 odd points away from its 52 weeks high? No, I cannot claim that but I am sensing that we have already formed the top and based on that I took few short deals in the market. I would be happy in putting nail at 6111 as top.

From past many trading days I am saying about the support at 20 EMA. It is now at 6021. Nifty came very close to that yesterday but saved by some short covering on expiry days.

Focus on three things on my given chart –

First, RSI – you cannot conclude that it is even stable. It is giving a hint that it can drift any time lower to pressurize indices.

Secondly, 20 EMA – It is acting as strong support from past more than two months. Now it is at 6020. If it starts closing below 20 EMA then it can exhibit potential to end the rally.

Thirdly trend line – look at short term support line. It has violated yesterday. Take a note that trend line study is the basic of technical analysis and you cannot ignore that.

All these are suggesting that Nifty can head towards 5940 levels. It may take some pause near 5980 levels but those may not be stable support. You can sense pressure all across the globe from first week of February. I will not be surprise if Nifty remains dead for one more day.    

Strategy for Nifty February future: I am again repeating that it may not be easy for Nifty February future to cross above 6111 marks. It has closed lower yesterday. Technical charts are suggesting that if it breaks 6050 then you can get a slide towards 6010 to 6000 marks. On higher side 6094 and 6111 will act as stiff technical resistance. Keep one thing in mind – Nifty February future will also try to give up some premium.

S&P 500 – Till now S&P 500 is trading below 1500 marks. It has strong trading support at 1490. I feel that bears will start commanding position if it start trading below 1490 levels. On higher side 1507 must be untouchable. I am expecting technical correction from little longer time but it is keeping me under water yet. I strongly believe that trades in the range of 1475 to 1500 will be opportunity to short. This week, it is on pause and for the next week – it will be get-set-go for fall. Contraction in GDP and US indices are still stable?       

Regards,

Praveen Kumar