20 October 2016: Nifty Elliott wave analysis: Nifty will face multiple resistances above 8700 levels. Long trades will be unsafe at higher levels.

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

For 20 October 2016: -

On 19 October 2016: FII Net Sold – INR 282.77 Crs:  DII Net Bought – INR – 724.64 Crs

From past two trading sessions market is giving resistance at 8700 levels. Whenever it tried to break 8700, bears turn heavy. 8700 is my anticipated resistance so far although it has not given any great sign of weakness at current levels. In fact, as long as Nifty is staying above 8700 we cannot think market can able to give meaningful sell signal.  

Equally, market may betray bulls at higher levels sooner. We are heading towards resistance zone. I am not very sure that we should take a risk of trading long although shorting also may not work. In alter sense we can say that we can get a buy if Nifty can stand above 8700. It is true but we can see multiple resistances above 8700. One such is 8720-8740.

I have already said that next leg of fall will be decided by the magnitude of recovery. It is a big question for the possible top. Let us see if it comes at 8700 or 8750 or at 8800.

For today’s trading session I am expecting market to open on positive note as indicated by SGX nifty. Technical charts are saying to avoid trade if one has no great guts to flow against market. I am not very keen in trading long at 8700.

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.

Strategy for Nifty October future – I am not very sure if traders can get safer trade by going long at 8700 levels. If Nifty opens near or above 8700 this will be a avoid zone for me. Technical support is at 8640-8630 levels. On higher side it should have resistance at 8700 where it is about to open. Logically, it can hit 8740 if it can sustain above 8700.

BANK NIFTY – Sell signal, if it has to comes then it will come on BANK NIFTY before Nifty. BANK NIFTY has resistance at 19500-19600. A sell may emerge from this range. I am not short of now on index future but I may have planned to add short on weakness. I am buying some put options near to expiry. I am not ruling out the possibility of flash sell off before weekend.