02 August 2016: Nifty Elliott wave analysis: 8580-8550 is a decisive support and must be a stop loss for all long.

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For 02 August 2016: -

On 01 August 2016: FII Net Bought – INR 726.22 Crs:  DII Net Sold – INR – 413.77 Crs

I was concerned about bank nifty as it has refused to break higher above 19200 and we saw a fall. This is still concerning near 18700 levels. Nifty has strength but if pressure has to come then bank nifty can put pressure on it. I still consider that bulls are supposed to be last winner for this week of trade. I used yesterday’s dip to add long.

My anticipation is that we may see levels of 8900 at least by this week before any final profit taking. In that way one should just think to buy in every possible dip.

For today’s trading session I am expecting market to open on positive to flat note. I will focus on the possibility of 8700 as of now. Technical support for Nifty will stand in the zone of 8580-8560 levels. I still prefer that one should trade long only in case of impulsive dip and keep a stop loss around 8550 kind of levels on Nifty. Will banking stock give support?

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 have a long trade on this instrument from 8650-8660 levels. This is not completely out of threat but I expect that it should head higher. I will see confirmation if it can stand above 8700 levels. As of now I have a plan to follow stop loss around 8620 levels. Let us see if this works. I am still looking for bigger target for this week.  

BANK NIFTY – I was concerned for Bank Nifty and we saw a dip. I was worried about this kind of situation where Nifty try to sustain but Bank Nifty gave a dent. Technically 18700 is a support but I am advising strong caution in this zone. If this breaks 18700 on decisive note then 18400 will be next big support to talk about.