07 June 2016: Nifty Elliott wave analysis: We are on policy day. Market to decide direction based on outcome. High chance of Top formation at 8275-8300.

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 28.30 Crs:  DII Net Sold – INR – 230.63 Crs

We are on policy day and finally the day comes. We saw six trading sessions goes as waste. Nifty is just here and there at 8200 levels. Wildest thing in this market is expectation. I d o not speculate on expectation. Rate cut may come or may not come. I have no idea this too as I was wrong on many time on predicting events. I can suggest what charts are saying.

For today’s trading session we can expect the market to open higher. It may go above 8240 which is a lower band of decisive resistance. Resistance zone is 8240-8275. If this fails in this zone then I may say that short term top has done again on policy day. Well, I can just hope that we can get a direction and we can get a big day to trade. I was expecting 8300-8340 to be the top before or on policy but it seem that my target will remain short by some margin.

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 can again say that market may not be productive till 11 am as market man prefer to wait for policy out-come. Technically, 8280 is a resistance and market may open on optimistic note. There is no point to take trade based on speculation. Wait for RBI policy to come as it can give a direction. I must remain that there were occasion when direction after policy outcome reverted in 2 hours only. In most such cases it resulted a short term 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. 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.