25 August 2014: Nifty Elliott wave analysis: Expiry week may invite more puzzles if Nifty goes above 7940. It may be in the race of 8000 if breaks higher above 7940. Good confirmation of fall should come below and only below 7850 as per Wolfe wave!!!

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

For 25 August 2014: -

On 22 August 2014, FII Bought INR 302.06 crs and DII Sold INR 183.64 crs

Friday’s closing goes surprise for me. So far, it has denied the possible impact of Wolfe wave at new all-time high and denied strongly. It has nearly 1% away from threshold support of 7850. As long as it is staying above 7850 we can say for a move towards 8000 levels. Race may be quick and confirm once Nifty start getting life above 7940 levels.

I need to repeat again that Wolfe wave will take effect if and only if Nifty spot breaks 7850. It is looking like a rising wedge now. The major characteristic of this formation is that it may try to give some sharp rise before fall. In such case, expiry week may go wild. Lots of shorts are left in the system and many new shorts much have added in the anticipation of fall. Market can fall from top but we not be on exact top yet.

We have a range of 7940 to 7850 where Nifty will swing without any direction. As per Fibonacci series, above 7940, this market will be only for bulls again. Elliott wave target can be 8132 and 8000 may act as psychological resistance. Remember, till 8000, Wolfe wave effect cannot rule out.

Another important point is that moving average supports are too far from current levels. Even 20 DMA is 160 points away. In case of fall, those may also be as sharp as rise. Pick of the sectors can be banking, technology and auto. One must avoid long on those mid cap which has already shown weakness in recent days.

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.

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Strategy for Nifty August future – Nifty August Future should open on caution note on expiry week. It is the time to switch trading activity in to September month future. So far, August future has high fluctuation in its premium. Technical support will emerge at 7890 zone. If it breaks 7890 then we can expect a move towards 7860-7850 levels which is a decisive support. On higher side 7940-7950 is a resistance. Take a note that cross above 7950 will add short covering to challenge 8000 levels.

S&P 500 (USA) – Was it not a good time to test 2000 on Friday’s trading session itself but it missed and closed at 1989. I still believe that near to 2000 levels will offer a psychological resistance. I feel that 1994 was a good trading resistance point. We have bearish divergence on hourly chart and it need to retest levels of 1975 before making attempt for 2000 or higher. This current move is suggesting that near term top will come as 20XX!!!