Sunday, October 20, 2013

Elliott Wave & Technical Analysis for Nifty




Stock Markets have closed at the Highest Weekly Close level of 2013 and are quite near to Yearly and all time Highs. Lets check out the probabilities at this stage-



1. Probable Scenario

a. 
We may be trading in a treacherous sucker B wave that started from 5119 level. It has now done its minimum on crossing of 6142 pivot. It can extend to 6335-6500 level as calculated in chart below. This B wave may give a false bullish impression by crossing historic and important price levels only to deceive in a C wave down. 


b.
The short term chart also gives a similar insight, that the leg up may exhaust from here or extend to the target zone mentioned above on a close above 6200 on daily basis.



Here is an interesting data set that compares the Nifty 50 stock prices at the Nov 2010 level, which was the previous Long Term High and of Now. It is reproduced from the blog of Mr. Sunil Saranjame -  The Indian Market Monitor



As of now it substantiates the Probability discussed above.


2. Alternate Scenario

a. Monthly Chart :
It throws up a very Bullish Probability.



b. Weekly Chart:
The sub waves of the above count shown in the chart.



Conclusions

- Short Term Trend is Up . Medium Term Trend is also Up but with waning momentum.

- The current leg up from 5701 can end abruptly near the top made as of now or can extend to 6335-6500 zone if 6100 is held on Daily closing basis. 

- Close below 6100 may signal a short term Top in place and below 6030 the downtrend may accelerate.

- Caution is required for the Longs moving ahead from here and take the super bullish calls for 7200 level etc with a pinch of salt as of now. 

- Alternate Bullish Probability to be considered only on a Weekly Close above 6350 level.



11 comments:

Anonymous@V said...

Dear RV,

Great insight ....thanks for the same .....keep updating.....there are few people like you who bring such crisp analysis....even brokerage houses that have a big research team do not share their proper technical analysis..

It is the third attempt to take out the top....which usually suceeds.......all world markets are in multi year high....liquidity awash....retail indian exposure at an ebb.....no excitement.....it can only bring in new sucker class of retail investors....as euphoria is generated....as rightly pointed out lot of nifty stocks at lower levels than previous tops....in fact SBI is barely above 1300 range...its earlier bottom....any green shoots created by liquidity and technical factors can ignite a rally....not much primary market activity....gold rangebound....oil shock already priced in....I would go with the 7200 side....good monsoon and falling inflation from high base going forward and appreciating rupee.....all bode well...all roads lead to bull camp....midcaps to bring superlative returns....

Yash and Dhan said...

Good Morning RV,
Great analysis as always. Again the list of nifty shares brings us to the question that if the shares are so undervalued would it not be bullish as they have a lot of distance to cover and if these start going back to there individual highs where would nifty end. We are really at an amazing juncture. Can go anywhere from here indeed.

AAR VEE said...

Update as on 24-10-13
--------------------------

1. Minimum requirement of 5 waves from 5701 done at today's top. Refer hrly chart above and adjust subwaves as follows -
wave 3 done at 6219 ,21-10-13
wave 4 done at 6117 ,23-10-13
wave 5 may have been done at 6253 today.(on whipsaw of 6220,above 3rd)
Now wave 5 may extend in an ending diagonal if holds the low of 6117

Alternate subwaves may be-
3-4 done as shown in chart and from there its in a ending diagonal.

2. Daily candle is quite bearish and signals for a sell on rise with stoploss at high today.

3. The trendline up from 5701 will break with a break of today's low. It will be a bearish signal.

4.so as of now-

- Short term looks exhausted with a probable top in place.

- Rise in price to be used for shorting with stoploss and money management.

- Extension above 6253 may frustrate traders so patience required if happens so.

-As mentioned in the post - Close below 6100 may signal a short term Top in place and below 6030 the downtrend may accelerate.

Anonymous@V said...

great technical insight....but fund flows and fii longs in futures may change the charts....who can fight a raging bull.....of course small profit bookings can be digested....also govt may like to see the markets up before assembly elections in 5 states

Anonymous@V said...

bank nifty will push up the nifty....it is showing signs of strength....sup 10835-10855 range....below that 10740....IT and metals in profit booking mode....

Anonymous@V said...

bulls will not let go off easily...there will be whiplash back to 6200-6230....where longs can be exited , though going short can be considered cautiously

AAR VEE said...

The UPDATE of 24-10 holds good. Please go through it. Looks like close above 6250 and that below 6100 holds the key to the Positional trade in the short term with a likely trigger to come with RBI Policy on tuesday,29-10-13.

Anonymous@V said...

RBI likely to hold rates in a bid to boost stock markets prior to elections....also currency and oil prices give it a breaher....forex reserves are also rising.... a cushion to keep OMC out of open market.....bank nifty to outperform and lead....consumption is already good and monsoon to give it a boost....inv in projects to pick up as previous efforts come into play.....

Amit Kapila said...

Thanks AarR V Sir for your valuable update.

INDIAN MARKET TIPS said...

AAR VEE Sir,

Really Great View........Thanks you Very much Sir..

anonymous@V said...

Dear RV,

Eagerly awaiting your update...breakout has occured...what about correction and upside targts.....cheers

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