20 August 2014: Nifty Elliott wave analysis: Today is eighth day from 7540. Rally can extend till Friday if we manage to see a positive close for today. Greedy top may come close to 8000 levels.

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

For 20 August 2014: -

On 19 August 2014, FII Bought INR 559.39 crs and DII Sold INR 263.37 crs

It was silent trading session yesterday with a hit on one my mentioned levels. It was said yesterday that it may hit levels like 7920-7950-8000. We saw resistance at 7920. It was nothing but a trend line resistance as marked in the given chart. Most noticeable thing is that we are on eighth trading day from 7540 levels. It is one sided rise. Most promising will be if we see a positive close today. If this occurs then we have a scope to see rally till Friday and even 8000 levels will come till that time.

I must say that from now onwards it is compulsion to see Nifty closing above 7920 then only we can see comfort. Dip from 7920 will not good and favourable for market. In we have many reverse H&S pattern emerges on many stock charts. This shows that even if pullback comes it will be bought from lower levels. This kind of pattern has seen in many banking stocks.

For today’s session, we will see a silent opening. Immediate trading support will emerge at 7880 and then at 7850. Big question now for traders it that can we able to see trade above 7920 on eighth day of the rally. I need to add word of caution for the day.

We are seeing participation in mid cap and small cap stocks too which shows that market is in greedy mode now. If this is right then as per time cycle we may get a short term top at 7920 or 7950 or 8000 at the max.

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Strategy for Nifty August future – Nifty August Future should open higher near 7900 levels. It did nothing great in last trading session. Even for today’s trading session my condition remains same. If we can spend time above 7920 -7925 then we can expect short covering rise before forming a short term top. Trading support is at 7800. Exit from long if it breaks 7880.

S&P 500 (USA) – As suggested in the road map, S&P is heading towards 1990+ levels. I need to conclude one thing that this tie it will not only test the psychological levels of 2000 but it may also head for 2025-2040 levels which was many brokerages target of the year end. At some point we need to be cautious. Out call ratio is showing the excessive people trading for long now. 60 minutes chart has emerged with negative divergence. Before hitting 2000 levels, we may expect a short term pullback. Do not jump on long now. As of now, I am only saying, do not buy rise. Just wait for pullback. Book if you have long at any point in the dip.