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10 December 2012

NIFTY - TIME TO BE CAUTIOUS

Hi Friends,

In last post I mentioned about the Year End Rally to 5950-6040. Well we achieved 5950 much before expected time. So here it is time to Book 80-90% of the Longs.

As per my preferred count this entire 2012 Rally is just a Corrective Pull Back of 2011 Fall. Currently move form 4531 can be labeled only as a 3 Wave Corrective Pull Back. So this marks for a Wave (b) of a zigzag. 


NIFTY _ Daily

On a Daily Chart we can Clearly see a 5 Wave Rally from June low of 4770. Currently Nifty is in 5th Wave which might have been over at 5950. RSI Negative Divergence in 3rd & 5th is a reason to be cautious. Also Nifty has Retraced up-to 78.6% of 2011 Fall. So Bulls must be extremely careful at current level.

Lets look at some calculation where this 5th Wave can Terminate.

1. Wave 1 - 4770-5348 = 578. 5548+578 = 6126
2. Wave 1-3 - 4770-5815 = 1045
a. 1045*0.382+5548 = 5948 (Already Done)
b. 1045*0.618+5548 = 6194

Nifty has already achieved 0.786 of 2011 Fall or 0.382 of net Distance Traveled by Wave 1 & 3 within 'c' of (b). Hence, Bulls need to be extremely careful at current level.


NIFTY - Hourly

On a Daily Chart Thursday's Candle Marks for Hanging Man & Friday's has a Black Candle. So this could turn out to be a point of Trend Reversal. However, on Hourly Chart Friday's Fall appears to be a Correction of the Thursday's Sharp Rally in 2nd Half. So (V)th inside 5th of 'c' might be Extending. So until we don't see a Sharp Cut on Nifty Below 5839 Trend will Remain Up.

Since this is the Final Leg of the Rally, there is high probability of (V)th Extension. 5th Waves often Truncate or Extend. Since Nifty has crossed 5815 there is no case for Truncation. Hence, in my sense this 5th Wave might go beyond Bulls' Imagination & Eradicate all Bears from the System.

In case of Extension my target above 5950 would be 6068-6126-6147-6194. However, any further Rally must be used to Exit Longs, as 5th Extension is an Indication of Dramatic Reversal Ahead.

In Case Nifty starts Drifting Lower, 5750 & 5650 are Imp. Supports. Failure to hold 5650 (Channel Support) would have a much Bearish Implications. If Channel Breaks there is likelihood of Sharp Fall till 5090.


So lets wait & watch..

Thanks & Regards,

Harsh Dixit.