20 January 2015: Nifty Elliott wave analysis: Will it take out all-time high in one go or will it go for consolidation. Support for consolidation will be at 8450-8400 only.

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For 20 January 2015: -

On 19 January 2015, FII Bought INR 433.72 crs and DII Sold INR 237.71 crs

We got gap up three sessions back and since then market saw three positive closes. It is remarkable that we saw Nifty narrower trading day in every session. This is some time known as ascending triangle pattern. Not always but sometime this turn out to be a topping pattern. I trying shorting on index yesterday but failed to get any gain. I still believe that a top is near if Nifty fails to clock a newer all-time higher. Hence, from here, resistance is at 8600 and 8630 levels. We have scope to see a fall at least towards 8450 to 8400 levels.

Elliott wave theory is saying that above 8445, Nifty can challenge its previous all-time high. It means that we may in striking distance of 8626 by early this week. It used to open two way analyses if it comes near 8629. First is another 250-300 points run on higher side to claim for 8900. Another is, if it turns shy near 8629. It can result a quick fire profit taking. There is no way to claim in advance at such levels so let it come. I must add that a newer wave will be applicable on higher side only if it can move above 8630. So, if one want to take long from 8550+ levels then it is better to wait for next 1% upside to come as confirmation.

For today’s session, it should not go on gap up anymore now. Even if it comes then also 8600 and 8630 should be crucial resistances. In the down side trades below 8520 should generate a caution in this advancing rally. Take a note that we will have a higher low pattern which is a sign of bullish move. Trade above 8630 will give a view that we will have higher high pattern too. This will make market bullish and move bullish. So, call for correction is just because of the possibility of consolidation before any big rally.

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Strategy for Nifty January future – If Nifty opens in flat range then we will see some trading resistance emerging at 8600 and then at 8630 levels. Technical support will emerge at 8530 to 8510 levels. It seems that break below 8510 should generate some good price correction. I advise strong caution for the day on higher levels.

S&P 500 (USA) – A bounce came exactly from 1990 support again and it came on the time when it almost gave a sense of give up. What shall we conclude with this bounce from 1990? It is still showing signs that market will put its best effort to save. As long as it holds 1990 it is showing direction as up. How long can this continue? Answer is as long as market wants. I am not optimistic for second half of January. Bears are coming!!!