27 July 2016: Nifty Elliott wave analysis: 8650 may as resistance now. Derivative expiry can go higher only if it can see short covering.

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

For 27 July 2016: -

On 26 July 2016: FII Net Bought – INR 670.89 Crs:  DII Net Sold – INR – 418.29 Crs

I feel that market is facing resistance at higher levels near to derivative expiry. Remember that this is 700 points old rise. At some point and at some stage, it has to face resistance. We have derivative expiry tomorrow and market may go in unpredictable mode. It has shown early sign of tired move in second half yesterday. In general, I prefer to avoid trading near to expiry.

For today’s trading session I am expecting market to open on positive note but it will face resistance at 8650 levels. In the lower side 8570-8560 should be support. We can expect some heavy resistance on higher side. It may not find it easier to cross resistance of 8650. Well, it is derivative expiry and one propelling force can destroy all resistance. This force can be short-covering. Will it come? I do not know yet.  

After looking to this structure and then way market has refused to break below 8000 even in panic we can say that market is preparing something big. This big think can be as big as 9000-9100 levels of Nifty. I see such great possibility hence bears must be cautious.

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 August future – I came off my long yesterday at 8685 levels and then we saw fall in second half. We have added short yesterday at 8665+ levels before seeing fall. I like to see how it reacts after opening hours. If it fails to rise then a decisive fall may come before expiry. I am extremely cautious before derivative expiry. I must save my trades from any kind of short covering.

BANK NIFTY – This turned as laggard compared to blue chip index. This is my only worry point but I am still optimistic. Good decisive cross over point is 19200. It has slipped again before 19200 and my worry continues. Technical charts are saying to avoid this index as long as it is below 19200. From near to this levels, this index is not safe for bulls.