06 June 2016: Nifty Elliott wave analysis: Another attempt for 8300 before RBI policy tomorrow. Only short covering can cause big rise.

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

For 06 June 2016: -

On 03 June 2016: FII Net Bought – INR 1585.01 Crs:  DII Net Sold – INR – 393.21 Crs

We are just day away from RBI’s next monetary policy review. This is going to be very first RBI policy for RBI governor after political attack. It is interesting to know the outcome. Market has no great expectation this time but political pressure is something that can rule. Bank nifty has performed better than Nifty. Well, today may be another dull day just like past week.

For today’s trading session we can expect the market to open flat. If market has to move then it can move with possibility of outcome of RBI policy. Technical set up is for a dead day. It can be just little up or little down.

If I am right then we may see levels of 8300-8340 before RBI policy but this may not be easy one. I expected this to happen even on Friday. It is interesting to see how market will react on top today. At one glance we can say that one should avoid shorting unless something big happens near top for intraday. Will something big happen? Technical support is at 8150-8160.

Do not misinterpret. I gave a long term trend as down from more than a year back. Nifty hit 9119 and then I issued for a long term top. Nifty hits a low at 6825 on Budget day this year. After such down side, wave theory had suggested for comparable recovery with three big possibilities for retrenchments, first to come at 50% at 8000, 61.80% at 8250 and 76.40% at 8575.

101%, I retain my view for long term trend down but that does not says that we cannot interprets for short to medium term of recovery. This recovery was bound to come and it is coming to make a wave [B]. Now, just imagine the magnitude of wave [C]. Higher the retrenchment, bigger fall will hit in future. If this wave [B] tries to end up near 9000 then 9119 may not be visible for many years. So, where is my long term target on Nifty? Well, it is in the zone of 6000-5500.

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Strategy for Nifty June future – I traded short on Friday and earned very little. If market opens higher above 8260-8274 and it remains there then we can see levels of 8340 by today itself. It needs to sustain above 8260 for some time. Market next wave of rise will depends on short covering by trapped bears. They will give at some point and that point will be top.

BANK NIFTY – It was better than Nifty for last trading session but not better in tern of resistance. It is still near resistance of 17700. Any breakout can cause 400 points of rise. Will it happen today or tomorrow? Key goes with the outcome of RBI policy. I am not trading this index so far. Time has come. It has to perform better than Nifty in both cases. Either up or down.