07 January 2016: Nifty Elliott wave analysis: Chinese woes can cause another big gap down. Next support – 7650- Heavily oversold.

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

For 07 January 2016: -

On 06 January 2015: FII Net Sold – INR 352.42:  DII Net Bought – INR – 13.19

Relative performance is one thing which net down side is another thing. Nifty has closed will fall for three days in a row and almost breaking every possible intraday supports. Now once again Chinese worry can overshadow all possibilities of relief rally. Chinese market is down by 7%. All global indices are bleeding.

It looks like H&S pattern is taking its effect. Well, if H&S pattern goes on its true mode then 7200-7100 is the possibility. Meantime Nifty is over sold for short term and intraday chart. This says that market may ignore MACD positive divergence and sooner or later it will hit 7200-7100 levels. After that 6500 will be the figure which people will talk about.

For today’s trading session, we may see a gap down as most global indices or indices futures are down again.  One can expect this to take support around 7650 levels only. Do not buy unless a strong buy emerges. There is no great chance of shorting index after 80-100 points of gap down. Do not trade.

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Strategy for Nifty January future – One can expect another bleeding opening and no possibility to jump on trade on either side. This says that market is on panic mode. Over sold hourly chart may drive support at some levels which are not known yet. One thing is clear that Nifty may not have chance to break 8000 easily sooner.

S&P 500 (USA) – It goes on 1990 and now it is concerning. It is breaking regular trading pattern. Right now US indices futures are down again by 1% on Chinese Woes. I can say one thing that it is heavy oversold in short term and hence a relief rally is expected. Will come from 1990 or will it come from 1960. Only time can answer but definitely “a big warning” sign of on for long term trend. Warning is for those who are still considering long term trend as up. I am not amongst those.