03 June 2014: Nifty Elliott wave analysis: RBI policy to govern the trading direction. Stiff technical resistance is expected at 7400 and then at 7450+ levels. Do not buy at higher levels as market may slip again from high.

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

For 03 June 2014: -

On 02 June 2014, FII Bought INR 2977.62 crs and DII Sold INR 148.81 crs

We saw one sided gain in all indices yesterday. We have RBI monetary policy today. To be on fair side it will be very unfair to expect rate cut. We need to note that monsoon forecast is ‘below normal for this year which is looking correct so far. This can add fuel to inflation and it will give tough time to RBI governor. It is only the Modi magic which makes people optimistic.

I am little uneasy with Nifty hourly chart. This rally may be on halt either at 7400 or near to 7450+ levels. Well, it may still have scope to move higher but this rise may not sustain. So, what market is expecting and what it is going to get will have lot of difference.

According to Elliott wave theory on hourly chart, Nifty is in trending wave ‘C’ which is a part of corrective full wave. So we are in wave ‘C’ from 7504 and we have already travelled a distance of nearly 200 points. Logically end point of wave ‘A’ need to be broken. End point of wave ‘A’ is at 7130. This is prime reason that I try to be reserve from buying on rise although stock specific moves are coming to catch for good.

For today’s trading technical support will be at 7325 and then at 7300 levels. On higher side, it will face resistance at 7400 levels first and then at 7450+ levels. We may have impulsive rise or fall near 11 am depending on RBI announcement. Mid cap and small cap indices are moving rapidly and dangerously.

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Strategy for Nifty June future – Nifty June future may open near 7390-7400 levels. It will be better to stay away from trading on index till RBI policy comes. I feel that we will see some heavy resistance and profit taking from higher levels after RBI policy. Technical support will be at 7330 levels.

S&P 500 (USA) – S&P had a boring trading day yesterday. It has closed at 1925 which is just in striking distance from expected 1930 levels. First hint for top formation is coming from AAPL stock which hit a high at 644 day before yesterday and closed in red for two days in a row. It is suggesting me that top is near. Perhaps top will come at very close to 1930, it may violate by few points but it cannot be far away from this level.