Monday, November 5, 2012

Nifty Elliott wave count

Bottom Line: Nifty had a big Gap up opening of 50 points and managed to sustain the gap for the rest of the day on Friday…

Nifty Daily chart:         
Nifty 30 mins chart:

Wave Analysis:

We have mentioned in the previous update, “A decisive close above 5680 will provide positive confirmation that wave 4 is over and final leg wave 5 has started on upside towards 5950. Failure of prices to cross above 5680 will indicate that complex correction is still ongoing and one more retest of level near 5580 is possible.”

Nifty had a strong gap up opening of more than 50 points on last day of the week and managed to sustain the gap throughout the day. After having strong opening prices moved in a range of 30 points. We have been observing that prices have been moving in such a narrow range after opening most of the times over past few weeks.

Nifty managed to break above the resistance of 5650 and 5680 with a Gap up opening and took support at 5680 level on intraday basis. This not only breaks one of the crucial resistance but also the downward sloping red channel on upside.

As shown on daily chart prices came close to the 0-2 trendline we have shown over past few months and bounced back from there. All this indicates that intermediate wave 4 is over at the low of 5680 and final leg on upside has started. However we will closely observe today’s movement and if we can see a follow-up rally after Friday’s gap up move. Also next important hurdle is at 5720 from where prices have turned down for more than 4 times in recent past.

From time perspective, a close observation of wave 3 suggests that it took 18 days if we exclude 1 Saturday (8th September) on which market was working for 2 hours and 5th October 2012 was an outside bar. This suggests wave 4 correction as complete even Time wise.

In short, it is important to see if the Gap of Friday remains unfilled today and prices manages to stay above 5650. A close above 5720 will provide further positive confirmation that wave 5 has started on upside for first target of 5950. A reversal taking prices back within the red channel shown on 30 mins chart and below 5650 will increase the odds that wave 4 is continuing in complex formation.

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