06 January 2015: Nifty Elliott wave analysis: NIFTY has key support in the area of 50 DMA which is at 8320. If it breaks 8300 then we may see fresh trouble with reversal.

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

For 06 January 2015: -

On 05 January 2015, FII Bought INR 472.00 crs and DII Sold INR 575.74 crs

I will not say that it has not given wider range for trade yesterday. It has given but I refuse to buy the index as it was far away from key support of 8300. In fact it was well away from 50 DMA also which was at 8319 levels. I like to see market reaction today after US market selloff of almost 2%. So far New Year is not good for US indices.

Before I add anything, I must say that current chart has similarity from December 2007 and January 2008. This is my reason of caution. It is just a caution, not a signal to trade. I still believe for one more up move but there is no need to do unnecessary adventure.

Based on Elliott wave theory we are in corrective up wave ‘c’ which will also be divided in three waves as shown in given chart. It has fulfilled the condition of top of wave ‘c’ in wave (b) itself. Is it sufficient to say me a sell? Charts never give such simple answer. I like to watch more. It is my hope that Nifty may not breaks 8300 easily before first half of this month. It will be a surprise for me if this happens. I am always prepared to take such surprises.

For today’s session, I am expecting a positive to small negative start due to sell off in US market future. It may see a start near 8320 to 8300 zone itself. If it revives from those levels then only it is a buy. Below 8300, it may invite troubles. Let us see.

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Strategy for Nifty January future – SGX Nifty is giving me a hint for opening at 8360 ranges. Immediate trading support will emerge at 8350 levels. If it fails then next key support will be at 8310-8300 levels. Do not trade immediately after a gap down. I am advising caution for this to convert in to bear gap down as it is coming suddenly against trend. My optimism for buy from low is applicable for today only and it depends on today’s close.

S&P 500 (USA) – I have said for yesterday that I will wait to conclude for buy. Decision was right as US market extends its sell off and many bulls are trapped from top. I had a plan to add long from 2035 but now it is giving me a chance to consider the support of 2015-2000 which is even better support than 2035. So here is comes for today, if further dip comes then I will opt to buy only. It gave almost 2% dip yesterday. I will keep my stop loss for all buy at 1999 and buy to come near 2010. What’s if it breaks 2000? Well, to some extent this chart has similarity from 2007 December. This is the main reason I saying that buy is applicable for first two week of January only. We need to conclude separately for rest part of the month.