12 June 2014: Nifty Elliott wave analysis: Key support will be at 7560, break will confirm the reversal. Let us see if it breaks today or not. Never long below 7560, we may see 200-300 wash out fall.

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For 12 June 2014: -

On 10 June 2014, FII Bought INR 682.26 crs and DII Sold INR 1215.47 crs

It was already quoted for yesterday that we may have a top formation from 7680 or 7700 or 7720. We eventually got the top at 7700 levels. After hitting a top at 7700 on dot we saw intraday dip. In my view, Nifty is still above threshold of 7560 levels. As long as it is above 7560 we can expect this support to work. Trend will reverse once it break below 7560 which is likely to happen in coming days.

I consider that 7570-7560 zone will play a decisive role for trend reversal. What I mean to say is that only if we close below 7560 then only we can say that trend is reversing for next wave. Equally, it does not mean for end of rally as long term trend remains intact and Nifty has potential to hit 8000 levels.

So far, what I see is that Nifty can come in the range of 7400 to 7300 and then only a next up move will start near budget session. Well, one need to remember that next wave of rally will depend on budget take. We have IIP data coming this evening. Market will keep its eye on monsoon progress which is not yet good. It is important to note that most important short term booster decision for economy is ‘cut in bank rate’. This factor largely depends on how monsoon progress.

For today’s trading technical support will be at 7590 and then at 7560 levels. Remember, a reversal point for this rally will be at 7560. It should come in a day or two. First sign of this kind of profit taking will be if small cap and mid cap indices shows relative weakness than Nifty. Rise will face resistance at 7680 < 7700 < 7720 levels.

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Strategy for Nifty June future – Nifty June future may open near 7620 levels as suggested by SGX Nifty. Technical charts are suggesting for support at 7600 levels after opening. If it breaks and sustain below 7600 then we can see immediate drag of 40-50 points. On higher side 7670 and 7715 will act as tough resistance. I still believe that Elliott wave reversal point on Nifty June future will be 7570 levels. Close below 7570 will give big dip.

S&P 500 (USA) – We have higher possibility that 1956 will remain a top. I still feel the need of close below 1930 to say for confirmation about upcoming dip. Let me clear it little more – a dip if starts from 1956 will have a target at 1800-1770 zone. Rest can be easily concluded. Better short signal will emerge at close below 1930. Let us see, it can come in a day or two.