25 March 2014: Nifty Elliott wave analysis: We are just two days away from derivative expiry. This momentum continues as long as 6550 hold for intraday. Expect profit taking from higher levels.

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

For 25 March 2014: -

On 24 March 2014, FII Bought INR 1465.62 crs and DII Sold INR 770.39 crs

Technical analysis says that rally should be innocent until proven guilty. So far, this rally is still innocent.

So diamond pattern goes in favour of bulls. It is just shy near 6600 levels. FII buying and election optimism continues. It is important to note that banking stocks has dominated the trend.

As it has closed in an uncharted territory so theoretically there is no resistance. Direction of all crucial moving is up as of now. Global cues are not very supportive now. DAX lost more than 1.50% yesterday. NIKKEI is near to next breakdown which can push it below 14000 marks by this week. Well, it has yet to give sell signal.

20 DMA is at 6417, which is nearest support. This is suggesting that market goes on over stretched mode. We are just two days away from derivative expiry of March month series. I still feel that upcoming two days may invite some profit taking. Indian rupee is almost at 8 month’s low right now against USD. This is key driver of recent days rally.

For today’s session, do not expect significant weakness as long as it stays above 6550 levels. Initial reactions should be avoided for trading.

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Strategy for Nifty March future – Flip flow breaks higher and it goes above 6600 levels. As long as it is above 6570, we cannot expect anything negative. It may open little lower due to global cues but technical charts are still stronger. Equally, I will not prefer to buy this rise. Below 6570 we may see some profit taking. It is better to switch actions on April month series now.    

S&P 500 (USA) – It hit 1850 again yesterday. 50 days moving average came at 1832 now which is logical support. If it breaks 1850 then it can invite the test of 50 DMA. More than that, 50 DMA is now flattening out. Will swing continue in the range of 1884 to 1850? It may be but now I am not giving biasing to anyone. My feeling is that time has come. This is 60^th month of rally in USA. One obvious reaction may come and test 50 DMA. If this has to happen then today is best day to do so. Technical resistance is at 1867 for the day. above which it can again try for 1884.