18 July 2014: Nifty Elliott wave analysis: If upcoming GAP down does not fill up then we are probably done with recovery. 7656 will remain a top for some time and a move towards 7400 will begin again.

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

For 18 July 2014: -

On 17 July 2014, FII Bought INR 1912.42 crs and DII Sold INR 1316.02 crs

It was said for yesterday that we may see top near to 7760 levels and this may end up as point ‘b’ on Elliott wave chart. So, recovery has done. After that we saw bloodbath on Wall Street which was expected in past few days. It slipped over a percent. I have not added short on Indian market but definitely we added short on S&P Future which had given a sell yesterday before opening.

Above cash buy by FII and cash sell of DII shows that we saw a tug of war between bulls and bears. I was expected a top to emerge as 7660 but this is still my expectation. We have not shown anything on Indian chart yet to say for top. Now, we may see gap down in Indian market due to US hangover. If this gap down maintains till close and we slide further then it will be named as bear gap down. Now, if this happens then I would say, yes, it has top at 7656. Then, it will start a slide again towards 7400 levels.

Technical support will be in the zone of 7600 to 7570 now. Wave theory is giving a hint for brutal top but this will see confirmation only by today’s closing. Take a note that it has not given confirmation yet.

For today’s session, I suggest to follow intraday analysis. 7660 is a tougher resistance to cross. Bear threshold will be at 7590 levels. If it breaks sustain below 7590 then we will head for panic sell off.

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Strategy for Nifty July future – Nifty July future will open down as indicated by SGX Nifty. Consider 7620-7600 as decisive support and there is no scope of weakness as long as it is above 7600 levels. What I want is – a break below 7600 and this gap down must sustain then only we can name as top. Let us wait for opening.

S&P 500 (USA) – So, after a long waiting it came in just a single day but it has yet to break below 1950. I feel that bears got their opening. That who was waiting with shorts has shown patience. Once, it breaks below 1950 then we will see a slide towards 1915-1900 levels. Well, I am concluding US market for long term top if we see levels near 1900 levels. Remember, it is heading towards 1950 as of now. So, we need more confirmation to conclude for long term top.