04 August 2014: Nifty Elliott wave analysis: Nifty has 50 DMA support at 7574 levels. I must save before RBI’s monetary policy review tomorrow. If not then another round of heavy sell off is waiting for us. Key resistance = 7660+

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

For 04 August 2014: -

On 01 August 2014, FII Sold INR 1072.96 crs and DII Bought INR 1074.70 crs

I have already said that if it sustain below 7660 then we have a possibility to see closing bear 7600. It was on dot right in second half sell off. We saw a bounce in first half and then brutal selling. If you are not aware then I must say that Nifty is just in striking distance of 50 DMA which is at 7574 levels. On 14^th July we were very close to 50 DMA but saved to see a uniform bounce from 7422 to 7842. Nifty has never broken 50 DMA since 21 February 2014.

We have RBI monetary policy review tomorrow. I have no expectation. Key rates are supposed to be unchanged. Indian market may try to build up some optimism but those are not very meaningful as of now. If Nifty closes below 7574 levels then we may have a chance to see levels of 7400 by this week itself. This month trades opened on very nervous note and this can be dirty below 50 DMA.

For today’s session, we may see opening with some initial higher levels and the only reason is that US market not as down as it was looking when we closed on Friday. Does this this make change in technical outlook? Definitely not,  If this market has to recover from here then also it need to sustain above 7660 levels which is going to be first big challenge for Monday’s trade.

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Strategy for Nifty August future – Nifty August Future lost almost 55 points on Friday between 2:45 pm to 3:00 pm trades. It’s so big and quick. Hourly chart may give a hint for pull back and which can easily come for 25-40-50 points but no pullback has any great meaning unless it successfully move above 7675 levels. I have a simple view, wait for first hour of trade and then decide if it is above 7575 or not. Do not short at low.

S&P 500 (USA) – We saw small follow up of sell off but closed well above day’s low as it was heavily oversold on hourly chart. Technical support area is supposed to emerge near 1910. As of now it looks like only a pull back. We may see mini pull back kind of things. It can max try to hit 1940 which will act as tougher resistance. I strongly believe that August month will dedicated for bears. Normally, when even US market misses summer sell off, it shifting towards August month fall. So far, beginning is supporting those facts. This month sell off will be as dirty as 1800 on S&P.