Monday, December 24, 2012

Nifty Elliott wave count - continues sideways action on year end!

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Bottom Line: Nifty has been moving between the levels of 5840 and 5950 we have been talking about all the while!
Nifty Daily chart:

Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “Prices managed to cross above 5925 on Wednesday but failed to sustain there yesterday and closed negative. The upper end of the Bollinger Bands® is now near 5950 levels and a close above this level will be important for short term positivity. In short, expect range bound movement between 5840 and 5950 to continue for few more days before a clear trend can emerge.”

Nifty had a gap down opening of around 20 points on last day of the week and closed down by more than 1%. Prices have constantly failed to close above 5950 or below 5840 and all this while we have mentioning to wait for confirmation before initiating positional long positions.

As shown on the 60 mins chart, wave ii of wave 5 has so far taken only 1.5 times the time wave i took. This keeps the possibility open that correction can extend in current week as well.

The current wave structure and medium term bias will remain positive as long as prices stay above 5700 levels. Move below 5700 will indicate that either wave 5 is complete at the top of 5930 or is forming an Endging diagonal (Wedge) pattern.

On Friday, prices have closed exactly near the support of 5840 after making a low of 5842. As we have mentioned before important support or resistance levels are normally taken out with Gap. A gap down opening below 5840 can take prices towards 5800 – 5790 levels. However, if prices sustains above 5850 – 5860 levels then a move back towards 5900 can be expected over short term.

In short, 5790 level should provide important support to prices if 5840 breaks. A close above 5950 will be required to confirm that next leg up has started towards 6130 or higher.

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