26 October 2016: Nifty Elliott wave analysis: Truncation on NIFTY @ 8740 will cause a possible test or break of 8500 in coming weeks.

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

For 26 October 2016: -

On 25 October 2016: FII Net Sold – INR 606.34 Crs:  DII Net Bought – INR – 389.11 Crs

My shorts are not working from the time I started shorting assuming 8700 and 8740 as the wave based resistance. Only reason that I could see is that market refuse to give us 8700 by partial extent. I still retain my view that sooner or later it has to slip. May be in that process I may not able to add short a top as I have already missed those top for shorting for trade.  

Nifty has just closed little shy from 8700 and market is like to see a gap down today. No matter for what reasons. 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 around 8660 and this may lead us for a possible sell generation. Technical charts are strongly suggesting that in that way market is moving it is like to see a big break on down side. It has saved at 8500 last time but this time we will see sell off below 8500. First hint must come by today only.

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 November future –November future contract will face resistance at 8750 levels. It is likely to see traded opening below 8700 market and that force me to believe that market is generating a sell signal which is missing from past one week. If this happens today will be a down day and tomorrow will be another bigger down day. Remember that we are on the verge of derivative expiry. I do not used to be very active in these days due to uncertainty.

BANK NIFTY – This index has surpassed 19800 also. This is making market bullish and giving a hope. Hope can see a shadow near to expiry. A possible truncation can come at 19900. It is interesting to see. Should one trade long? Well, this may not go the way it looks. It contain high amount of risk. As of now, if there is a trade then it is soft long which I will definitely avoid. In case of gap down, this will turn bearish to extremely bearish.