Nifty Elliott wave, Time cycles, Fibonacci

“Wishing you all a very Happy New Year 2014”

The below research is picked up from "The Financial Waves Short term update" by Waves Strategy Advisors. For subscription to daily research report delivered to your mailbox visit http://wavesstrategy.com/index.php/store.html

Bottom Line: Nifty volumes have been constantly falling with each up tick. Break below 6250 to provide first minor negative confirmation.

Nifty daily chart:

            Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that “The 74 period Time cycle is due today and it will be important to observe if a turn can happen today or by tomorrow.In short, move above Friday’s high of 6325 can continue the up move towards 6350 or possibly 6400. But we would advise to adopt a cautious approach and break below 6250 followed by 6200 can open up possibility for 6100.”

Nifty had a Gap up opening of around 25 points and prices quickly touched 6345 levels. It came close to the level of 6350 mentioned before. This level was also exactly 76.4% retracement of the previous down leg. Prices turned down in the very 1^st hour and traded negative throughout the day. The fall was exactly in lines with the Time cycle which was due today. So far Nifty has behaved as expected.

Yesterday’s fall has still haven’t breached the important level of 6250 so we do not rule out sideways consolidation between 6250 and 6350. Even if the supporting indicators are sending cautious sign it is imperative to wait for minor negative confirmation which will be obtained only on close below 6250 level.

As shown on 60 mins chart, we continue to show both the labels but failure to retrace the prior leg faster has increased the odds that the current up move is simply wave (b) and wave (c) on downside should start. This wave (c) can travel towards 6100 and break below it will open 5970 levels. We will keep this scenario as alternative as long as 6250 is not broken. On other hand, any move above 6350 will result into an upward thrust towards 6400 but the momentum has been drying out which can be clearly seen on daily Volumes chart.

Nifty daily chart, clearly shows that volumes have been reducing with each up tick and this time expiry also had very subdued volumes below 14 days average. The spike seen few days back is due to Power Grid FPO and can be disregarded. The entire up move has been with lower volumes and this I will not regard to year end closing since developed markets have still managed to move higher in unchartered territories.

In short, as long as 6250 on downside and 6350 on upside is intact sideways action is possible and close below 6250 will be first negative confirmation. However, any move above 6350 will extend the current up leg which can continue to be boring and slow. Hope 2014 will have good and more lasting trending moves after 1^st few days!!!

The above research is picked up from "The Financial Waves Short term update" by Waves Strategy Advisors. For subscription to daily research report delivered to your mailbox visit http://wavesstrategy.com/index.php/store.html which has Nifty and 3 different stocks with complete Elliott wave counts and explanation.