05 August 2014: Nifty Elliott wave analysis: All eyes will be on RBI’s monetary policy review. Outcome will decide market trend. Based on chart, momentum will fail at top for bulls and bears may again enter!!! 7750-7725 will be stiff resistance!!!

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

For 05 August 2014: -

On 04 August 2014, FII Bought INR 372.56 crs and DII Sold INR 250.80 crs

How to act before RBI policy? No one can ever have answer before this kind of event. I cannot see much optimism here in RBI’s action. Market wants to focus on RBI’s comment. Market want to listen for some time based clue for rate cut. I do not like to speculate as I cannot see any big reason for RBI to make any decisive comments. We have not seen rosy government action too. Inflation is already higher than RBI’s comfort levels and monsoon situation is still concerning. Western part of Indian almost facing big monsoon deficit.

Nifty has a support at 7574 as 50 DMA. I was not very keen on shorting low. I was even reserve for buying before RBI meet. I like to see the day before trading long. My expectation is for positive to higher start. Then, it may try to come near 7725-7750 levels.

For today’s session, I will not be active till policy comes out. I strongly believe that trading will be interesting if market gives up from some top. I am seeing a possibility of lower top formations on daily chart.  

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Strategy for Nifty August future – Nifty August Future closed with 100 points of recovery yesterday. It may make bulls comfortable as we have supports even if dips come. We may see higher 20-25 points of opening but question is will that sustain. I simple say, wait for RBI policy outcome before entering trade. I see a higher chance of slip in post RBI policy hours. Although, I am not speculating the outcome.

S&P 500 (USA) – First day of recovery cannot be named as sign of strength. I still expect that it can go in the zone of 1945 in the name of relief after 3-4% sell off which is acceptable. Based on hourly chart we may say that we may have some soft buying emerging here above 1930 for a move towards 1945. I must add that fresh shorts should not be added in lower side of the range. It would be meaningful to add short only if it can break 1910 zone. Will it break this week? Yes, it can!!!