NIFTY weekly analysis for 08 September’14 to 12 September’14

Elliott wave theory: I need to draw your attention towards a fact that a wave cannot said to be violated as long as it remains in the channel formed by corrective wave ‘2’. So, very clearly weekly wave trend is up. Now, we left with a possibility of forming top sooner.

Market cycle: We saw four weeks of back to back rise. Last time we saw five week gain was in May 2013. We all know what has happened after that.  We saw more than 1000 points of correction.

Technical indicators: MACD and RSI are growing with negative divergence. This is alarming. This is prime reason that I am advising strong caution.

Charting pattern: I always listen this factor and try to gives higher weightage as its only and only price which pays in market. Charts are saying that as long we are above 7860-8000, we are bound to see higher levels. Above 8150, it can see levels of 8240 before forming any final top. 

08 September 2014: Nifty Elliott wave analysis: Nifty may again give a test of 8132 to 8150 with the opening of this week. If it sustain above 8150 then 8240 is also within reach. Will Nifty ever corrects meaningfully?

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

For 08 September 2014: -

On 04 September 2014, FII Bought INR 1697.74 crs and DII Sold INR 555.23 crs

I said for Friday that 8060 levels will be crucial. It turned true. It has tested and bounced or you can that it has never sustained below 8060 levels. One intermediate mini bounce should come to form almost a double top. I like to observe this bounce for market reaction near or before 8142 levels. It is equally true that bulls are buying every single dip.  

Core of technical analysis is suggesting that as long as it is above 8000 marks, bulls will just buy anything or everything. Suppose, if it crosses 8132 to 8150 levels then we can expect Nifty moving towards 7900 levels too. It is at a stretch rally from 7540 which never corrected practically on daily chart.

I can see many toppy pattern on major global indices but Nifty is not amongst those. These small dips are just mini profit taking. Trend reversal can happen only below 8000 levels. How dangerously this market is moving higher? Just think that even 20 DMA is at 7883 levels which is 200 points away from current levels. So basically, if correction comes then even 200 points of volatility may be termed less due to gap in supports based on moving average.

For today’s trading session, market is supposed to open higher and I like to see reaction in the zone of 8132 to 8150. Cross above 8150 will invite bulls again to play wildly. Charts are saying, “Will this market ever correct?”

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Strategy for Nifty September future – Nifty September future should open on good positive note near 8140 to 8150 level as indicated by SGX Nifty. Zone of 8180 is only meaningful resistance. Monday’s high and low may turn decisive for rest of the week. I will try to avoid Nifty again at higher side if it turns choppy. After opening even 8120 will offer good support for intraday. 

S&P 500 (USA) – It hits 1990 on dot on Friday and then took full 17 points bounce. This is just confirming one of my facts that as long as it is above 1990, race is not over. We can name a top if it breaks and close below 1990. I still stick to my point that a major top formation is in the process. VIX has already started moving higher. It can break 1990 anytime and any day. Maximum possible levels for top can be 2020!!!