16 October 2014: Nifty Elliott wave analysis: Trend line support goes at 7800 levels while it is facing resistance at 50 DMA. Resilience against global fall will be effective above 7925-7940 levels.

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

For 16 October 2014: -

On 14 October 2014, FII Sold INR 694.67 crs and DII Bought INR 495.52 crs

Once again, Nifty took support at mentioned trend line. This move was completely against global cue. So far, Nifty is taking support and showing resilience against global sell off. On higher side, it is facing resistance near to 50 DMA. I still feel that Nifty is taking support and we are witnessing time consolidation in the range of trend line support and 50 DMA.

Historical charts are suggesting that we can expect strength only if it manages to stay above 7940 zones. Till that time, we may see sell off from higher levels. It is interesting to note that right now we are still in three wave dip pattern on Elliott wave. There are two important threshold points on three waves down (a-b-c). One point is 7928 and next is 7978. There may act reversal point i.e. from weakness to strength.

There is no great effect of global weakness. I may buy relative strength in Indian market. For today’s trading session also, we have support at 7825 to 7800 levels. On higher side meaningful resistance can emerge at Elliott wave threshold at 7928. Once again, do not opt to buy mid cap and small cap stocks.

Can we gain strength before Diwali? There is no clear cut sign yet. Historically, Indian market used to be sluggish before Diwali. Most of the time, real decisive strength used to come after Diwali session which used to continue till last of December. If weakness comes after Diwali then also, it used to last longer. So probably, based on market cycle, we are in indecisive zone for short term.

My warning is still ON. Below 7800 or close below 7840 will cost Nifty for a move towards 7600-7500, based on Nifty weekly Elliott wave chart.

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Strategy for Nifty October future – Nifty October future may take some positive opening. As long as it is staying above 7890 I am expecting levels of 7950-7960 levels at least. I am not denying the possibility of 8000 either. Do not short unless it go below 7890 or show weakness at higher levels. I am keeping study and levels exactly same as of yesterday.

S&P 500 (USA) – Oppss !!! What a last night S&P had. It hit a low at 1820 and then bounced. This happened due to wide gap in supports. This sell off was quite expected. If you remember, I have already said for high for 2014 when it was hitting 2011. Well, what is next is the big question. Technical charts are hinting for consolidation in time wise and in price wise too. Hence it may not take out 1820-1800 support in a hurry but who can predict European market. End of QE is acting as shocker and it can prove me wrong in the magnitude of correction. My basic is suggesting me not to bet on recovery unless we get at least on positive close.