17 June 2014: Nifty Elliott wave analysis: As long as Nifty is below 7560, we can expect this fall to continue. Add fresh short only if it breaks 7485 levels. No intraday rebound can sustain so avoid long specially in mid cap and small cap stocks.

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

For 17 June 2014: -

On 13 June 2014, FII Bought INR 1099.92 crs and DII Bought INR 358.71 crs

WPI May inflation came at 6.01% versus 5.30% on the previous month. It came due to costlier food items. Remember that we have a strong possibility of deficit monsoon this time and situation could be more troubling for inflation. So, we cannot expect sooner rate cut. As of now, there is no chance for rate cut for at least three to five months’ time.  

Now, let us concentrate the charting pattern. Based on Elliott wave theory we got a top at 7700 levels. If I draw it for target then we should get minimum of 7400 levels which can be violent in the area of 7400 to 7300. Hence, I believe that Nifty can enter in the zone of 7400-7300 before giving fresh rebound.

For today’s trading technical support will be at 7485 and then at 7410 levels. Remember, we are already below 7560 which was a reversal point. As long as we are below 7560 we can expect this dip to continue. We can expect at least 100 points fall from here also. Well, I have a view that fresh short should be added only if Nifty breaks below 7485 levels.

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Strategy for Nifty June future – Nifty June future may open near 7550 levels as suggested by SGX Nifty. Technical charts are suggesting for support at 7510 levels after opening. If it breaks and sustain below 7510 then we can see immediate drag of 40-50 points. On higher side 7580 and 7590 will act as tough resistance. I still believe that Elliott wave reversal will give us levels of 7400 or below.

S&P 500 (USA) – S&P has support at 1927 which was mentioned on last week too. It hit a low at 1926 and rebounded to a little. This rebound is just to make exit for smart bulls. This rebound will end sooner and a nasty sell off will start by this week itself. It may try to form a double top with second top lower than the first one. So the key level will be 1926. Break of 1926 will confirm for a sell off. Technical resistances are 1945 and 1956.