22 August 2014: Nifty Elliott wave analysis: A pullback remains in waiting. 7920 will again act as stiff trading resistance. Pull back will get confirmation below 7850 which is still little too far. 11th trading day from 7540 !!!
You must read previous articles and watch the given chart
carefully to understand this article completely.
For 22 August 2014: -
On 21 August 2014, FII Bought INR 412.77 crs and DII Bought
INR 63.74 crs
It is a dot top at 7920 and then a sell off for 65 points of
Nifty. Note that 20 DMA is at 7752 which is 140 points away and 50 DMA is at
7662 which is 230 points away so we have limited number of support in the
downside. This is challenging if we see even small weakness. I have already
explained about formation of Wolfe wave.
It is the extension of 1-3-5 or a-c-e as supply line. Bulls
get tired on supply line and they may just fail to give a break on higher side
or push on higher side. It will just cross and then dip. I am expecting that if
it breaks 7850 for once without violating top of 7922 then we may see some
brutal selling. So far, I am naming those as pullback.
Today is last trading day of the week. I am expecting a
pullback as of now. Remember that we have seen one of the sharpest 7 days rise
in the market so far. Reaction coming at higher levels must be an obvious
phenomenon. Market got supported with rise in Pharma, Auto and private banks. Below
7850 on Nifty, we may see some good confirmation of pullback. So far, this is
just speculative in nature.
S&P 500 (US) added a few more set of Tom Demark ‘sell’
signal near 1985-1990 ranges. This shows that at least for short term, rally is
on halt.
For today’s session, we will see a higher opening and then I
will plan to test for short based on Wolfe wave formation on Indian market. Have
a look at daily levels. Nifty hit lower low for three trading days in a row but
still trading up. I favour to add short on S&P 500 now based on Tom Demark
sell signal. Only problem is that it is also coming at new all-time high like
Nifty.
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Strategy for Nifty August
future – Nifty August
Future should again open for comparable 7900 levels. It has spent three days on
7900 levels. A pull back at least is in waiting but it has not come yet. I still
believe that 7940 will act as stiff trading resistance. We may have good
trading support at 7860 which is little far from here. If it breaks 7860 then
only we can expect some meaningful pullback today.
S&P 500 (USA) – It is now above 1992 and closed on
new all-time high. This is straight 90 points jump in just eleven trading
sessions. This is too much for now. Although it is a breakout but it is heavily
over bought on charts now. It deserves a pullback and it should come any moment
now. It is equally true that final top will be in the range 2050 and that move
should start after a correction. Right now, S&P may plan to test
psychological 2000 marks. A correction is in waiting…!!!
3 comments
Waves 3-4 must stay within the channel created by 1-2
Wave 1-2 equals waves 3-4 (shows symmetry)
Wave 4 is within the channel created by waves 1-2
There is regular time between all waves
Wave 5 exceeds trendline created by waves 1 and 3 and is the entry point
The estimated price is a price along the trendline created by waves 1 and 4 (point 6).
Now wave 5 exceeds the trendline of 1-2 and 3-4,so that we can take shorts anywhre between 7920 - 8000..is that right?
only worry is about FII's long position in index futures and index options
You are right !!!
As per Wolfe wave, this is perfect set up to short.
My only worry is that Wolfe wave rarely comes with life time high.
More over, Good confirmation will be below 7850. Then, Stop loss
will be high point which it can test in wave 5!!!
I will update more clear chart tomorrow on this topic!!!
Enjoy Weekend,
Bye,
Praveen Kumar
Check this snap -
pic.twitter.com/bxM1kmOt4U