Elliott Wave Analysis helps one understand the prevailingTrend and probable Targets to Trade. Though quite subjective , this theory if used with classical TA methods , is quite handful. It tells the 'Sailor' about the direction of the ' Wind' as well as the distance of the 'Port'.
Lets us now analyze where we are 'sailing' as on date -
1. The Basic assumptions and counts can be viewed in the Post - Click Here We may be trading in a Double Zigzag structure since November '10 High of 6338.
We may now be in the second zigzag labelled Y. This may be in its last leg of wave
C(Y) unfolding in a five wave structure.
2. The wave C(Y) may be in the subwave 4 since the low of 4720 in August end.
3. The wave 4 may be trading in a Flat correction of 3-3-5 wave structure as A-B-C .
4. The Flat corrective Pattern developing may broadly be like below . The wave C of the Flat ends slightly above the end of the wave A , rather than significantly beyond it as in a zigzag. The Price objective of wave C is apprx. 5180 if C=A.
5. The wave 4 may be in its last wave C ,which may be unfolding in a five wave structure as below.
6. The Fibonacci retrace targets show that its trading above the 38% and may go to 50% retrace just above the 5200 level.
7. Timewise wave 4 is related to wave 3 or wave 1-3 , often longer than them.
Wave 1-3 had taken 35 sessions to complete and we traded in the 32nd session of wave 4 on 14-10-11.
8. The Targets for C(Y) are as discussed in Long Term update Post - Click Here
9. Its Important to note down the 'Point of Invalidation' of any count . The chart below shows them for various counts of this wave as per the hard EW rule that a wave 4 must not trade in the zone of the wave 1 of the wave structure in consideration.
10. Caution should be foremost while trading Elliott Wave Analysis alone and that to proactively . The next wave to unfold should only be traded on its confirmation.