26 February 2014: Nifty Elliott wave analysis: Do not get tempted on derivative expiry. Valid resistance for Nifty is at 6242 to 6262 and support is at 50 DMA, i.e. 6180. Next wave of sell off can be global in nature.

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

For 26 February 2014: -

On 25 February 2014, FII Bought INR 423.41 crs and DII Sold INR 289.12 crs

Nifty has closed at 6200. It is not a bad close but it is surely a close which demands higher degree of caution. A small negative divergence has emerged on MACD hourly chart. We have derivative expiry of February month series today. I was expecting a global sell off to come but it is not happening yet. Many major global indices have a chart set up which is suggesting that whenever next wave of correction will come it will come with massive intensity.

Well, so far every index is either on life time high or at 52 week high except Indian market. 50 DMA for NIFTY is at 6180 now and this will act as strong trading support. If it breaks and stay below 6180 then we can think for the next support at 6150. Derivative expiry can makes the thing more complicated.

On higher side 6242 to 6262 is still valid resistance. As long as Nifty is staying above 6195 it has a possibility of higher test before next sell off.

It does not matter what short term charts are telling us. Long term charts are issuing the signs of warning for a brutal sell off of wave “C”. This can come any day and anytime. Hence, keep your eye on global market too. Reason can be anything for sell off and this kind of signal cannot be ignored because is raising form little longer and already entered in over bought zone.

Nifty charts are suggesting that as long as it is above 6150 there cannot be anything to be worry for bulls so far. Let us see what is coming. I find options as safer way to play contra shorts as technical signals are still for buy-and-hold mode. We have derivative expiry today.

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Strategy for Nifty March future – Crossover of 6205 has a hint for 6240 but that came as a gap. It will take a dull opening but rest part of the day is going to be wild due to derivative expiry. I can find decisive trading support at 6105. Resistance will emerge at 6260-6270 levels. Nothing can be sure for expiry day.

S&P 500 (USA) – It almost remains unchanged but closed below 1850. I will keep my study same as of yesterday. It is looking like a short term top or very close to short term top. I have noticed an interesting pattern. This is only the first time that S&P gave intraday breakout but not closing near day’s high. I am still shy for long deals. It is better to wait for the beginning of storm does not matter which side it comes. High possibility is that it will go lower only but so far we have good signal to short either.  

Regards,             

Praveen Kumar