13 October 2014: Nifty Elliott wave analysis: Once again, have an eye on 7800 levels. Break below 7800 will cause some panic sell off. Nifty may be heading towards 7600-7500.

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

For 13 October 2014: -

On 10 October 2014, FII Sold INR 719.77 crs and DII Bought INR 558.21 crs

Activities in global markets are favouring bears now. I have already said that we have a possibility of sell off in October month with end of QE program. So far, it goes right. We saw almost five bounce from the support area of 7850 to 7800 levels.

As shown in chart, we may see problem below 7800 levels. It is just about to break crucial moving average support. If it fails to revive from 7800 then a panic like situation is very likely. This situation arises due to large sell off in US market. Indian market has shown great resilience to save 7800 levels but odds are also too odd now.  

For today’s trading session, we may see opening on down side gap. If it can able to eat 7800 then we may see some rapid fall towards 7775 then towards 7700 levels. Hence, I am making this week as very crucial. In past few days we saw many gap up and gap down but nothing came below 7800 so far. Moving on higher side 7910 will act as stiff resistance. If opening goes below 7800 then 7840 will also act as stiff resistance for bulls.

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Strategy for Nifty October future – Nifty October future has support at 7850. If it takes out as gap down which is very likely then we may see selling intensify for 40-50 points more in the panic of long unwinding. Do we have a chance of trading after gap down? If gap down goes more than 1 % then one should opt to short in bounce only. Practically, 7850 – 7860 will act as resistance after opening.

S&P 500 (USA) – I have already quoted too many times about the possibility of fall towards 1905. Here it comes on Friday night. This is what I called as bull’s fear. I am expecting S&P to go as low as in the range of 1850 to 1800. Remember, it happened in past every times when QE ended. I am feeling that it is just repeating its pattern. With this blow it can end the possibility of quick recovery. Hence, I do not prefer to buy the dip for any quick gain except a small technical recovery but that’s also far from now.