18 June 2014: Nifty Elliott wave analysis: What a bounce yesterday!!! Now plan to trade long only if Nifty can able to sustain above 7650 levels. If not, then we can again see a move towards 7480.

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

For 18 June 2014: -

On 17 June 2014, FII Bought INR 48.02 crs and DII Sold INR 236.89 crs

It has a gap up on 6^th June 2014. Subsequently, the high point of 5^th June 2014 has turned a support which was 7484.70; hence I said yesterday to short only below 7485. Take a note that on Monday’s trading, it has just tested 7487.55 as a low. This turned a prime reason for me to pick long trade yesterday and what a bounce we got!!! Well, major part of that bounce was short covering by weak bears and irritated bears.

I draw a resistance line on hourly chart as shown in figure. This is key resistance line. If we start trading above this line then only one can plan to trade fresh long. So, higher breakout point will be 7650. Remember, if Nifty fails at 7650 then we will see a fresh dip again and it is needful to say that the target will near to 7400 in that case. So, most part of my study remains same. This kind of bounce need to come and bound to come.

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 7600 levels and resistance will be at 7650 levels. I will plan to trade fresh long only if I get clear signal above 7650. We have 100 points of gain on Nifty future yesterday. Key support will be again at 7560-7570 levels. Take a note; I am not saying that fall is over as long as it is below 7650 on closing basis.  

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Strategy for Nifty June future – Nifty June future may open near 7650 levels as suggested by SGX Nifty. Technical charts are suggesting for fresh long only if it can surpass 7670 levels with volume so we may not get buy signal in initial minutes. Key question is can I count 90 minutes of rise which came yesterday. I am again saying, ‘Be cautious at higher levels’. Do not add fresh long without decisive crossover.

S&P 500 (USA) – S&P has technical resistance at 1945 levels and it has respected resistance in bounce so far. I was expecting this bounce before giving a fresh sell signal. My expectation is to see double top with second top lower than the first one. It is very likely to see a drop from 1945 by today itself. Let us see if it comes. In the downside, confirmation point will be a close below 1926 which should come by this week of trade.