Monday, July 11, 2011

Sensex did not give a breakout above the important resistance Line!

Sensex Daily:

Sensex chart shows that prices did not give any breakout above the important resistance line we have been showing for quite sometime. This increases the odds that breakout on Nifty can be just a false breakout above 5700 levels. We have re-adjusted wave counts to accommodate recent activity and as shown on above chart we might be starting wave C down of Y. It is too early to confirm that a down leg is starting but a day or 2 of follow-up selling will increase the odds that wave C down has started.
Alternate scenario suggests that wave B is still ongoing and this down move can just be a minor pullback of rally from 17500 to 19000 levels and prices might just drift lower and consolidate before giving an upside breakout. Time-wise wave B should ideally consume more time than wave A and so this scenario stands equal chance. Both the scenarios as of now are equally plausible and so we will wait for prices to break key levels for trend confirmation.
Nifty Daily

Nifty 30 mins:

Nifty action for next 2 days is crucial to observe. As we mentioned above for Sensex, we have equally probable scenarios for positive and negative trend. Wave b is either over at the high of 5740 or is still ongoing and Friday’s pullback is just minute correction of the entire move up from 5200 to 5700 levels. The other scenario suggests that wave b is over and we are now starting minor degree wave c which will take prices below previous low at 5200. For now it is difficult to suggest which scenario is going to play out and so we will observe price movements very closely for next couple of days.
Over short term, as shown on 30 mins chart either of the scenarios are suggesting some pull back atleast till 5600 levels. Price reaction from important support levels will give us clue of what we can expect next.
To conclude, Friday’s down move was a bearish development and very short term trend is down with prices can correct till 5600 – 5550 levels. A move back above 5740 will indicate positivity and a break below 5500 will increase odds that we are going below 5200. But we will take one step at a time and watch Nifty’s reaction from crucial support levels.

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