Wednesday, July 11, 2012

Nifty - Elliott Wave Analysis

Nifty is very close to the upper boundary of a trading range, between 5342 - 5170. A break below 5170 is not healthy for the up trend. But we may drift down towards 5250 - 5220 range to complete the wave (4), if wave (3) is indeed done at 5342. We still have to travel some distance up, if our count is correct, at least above 5630 levels, and preferably around 5800 - 5900 zone. So till the 5170 level is not breached, we can safely call this a "buy on dips" market.Once we are through 5342 we may have minor hiccups at 5380 and 5500 levels. But above 5342 we should see 5630 with high probability.
On the above chart, we can notice an "expanded flat" in wave (2), then a nice 5 wave impulse move in wave (3) (which is still in progress, and not yet confirmed complete), and presently we may correct in a zigzag or a contracting triangle in wave (4) (by rule of alternation). I suggest one should wait for the RSI and STS to get to oversold levels on hourly fractal, before considering buying, and should trail the stop loss to 5170, levels. For fresh positions too this level should be an ideal stop loss.

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