NIFTY HAS ENTERED CORRECTIVE SIDEWAYS RANGE 4200-4500

Last week market opened at 4584.65 & went up till 4601.05 to form the high of the week.It then continued to decline to register the low of week at 4206.70 & finally closed the week at 4313.60.Thus it lost  269.80 points during the week over previous week’s closing.This is approximately 6% erosion in value.

RETROSPECT: -  Last we had recommended selling at any rally with the stop of 4670 for the target of 4200.Nifty came very close to the vicinity of target & made the low of 4206.70 before rebounding.Our readers must would have profit from this.
SENTIMENTS: - Market sentiment is bullish.However it has been dented with the intermittant FII selling, budget cautions, flat global markets & correction from the higher levels.

ELLIOT WAVE THEORY: - As stated in last many issues, on the shorter term the wave count from the 2539.45 though should be impulse,can be labeled in many ways.In a chart below we have shown two most probable wave counts on the chart.These are shown in the blue & green colours.Our first preference goes for the blue colour.In the green color wave count the retracement levels are far deeper & lower so we have avoided them for this week.In case nifty corrects very deeply in coming week then we will consider them next week.
 


In the blue colour wave count the it has taken support at the lower line of channel drawn.To analyze in further depth we have given below the 30 minutes chart.In this chart there are two major probable wave counts drawn in blue & green colors. Here again our preference goes for the blue color wave count & this will be further reinforced if the current up side correction crosses the 4412.In case if it fails to cross the 4412 then the green color wave trajectory will be most preferred one.

  




JAPANESE CANDLESTICK:- Last week we had the long body black candle after the 14 consecutive positive closing.It’s significance as such becomes too high.At the top of it, the last three candles pattern are distorted type of EVENING STAR OR BEARISH ENGULFING LINE  similar to somewhat happened at the Jan 2008 top.This leads us to the conclusion that this correction may further damage the price action or may move sideways but will not allownifty to move up.

CHART PATTERN:-  As shown in the weekly chart in the vicinity of 4650 there were three multiple tops  formed in 2008 & if we apply 3% rule & 3 days closing above the top, it has failed to do so even during its second attempt.We are of the view nifty needs more consolidation & decline in prices to gain further momentum to cross 4650 decisively.

PULSE-READING:-  JKD soul voice says that the first round game between the bulls & bears has been settled in favor of bulls therefore the second round of game at budget should settle in favor of bears.

OUTLOOK & STRATEGY:-
We recommend selling short in 4450-4500 range with the stop of 4530 for the target of 4250

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DISCLAIMER
This Newsletter is an expression of Technical Analysis. It is NOT a market prediction. It is NOT an advisory or suggestion to buy or sell any types of securities. This is an educational and learning exercise, only to share our methods of technical analysis. Trading and Investing MUST always be done with prudent money management and use of stop losses. One Bad trade can ruin the trader, so always keep risk low. IF you do not agree with the statements mentioned herein, please close this document, do not proceed further, do not read the Newsletter.