NIFTY'S DOWNTURN IS REAL OR FAKE? 

Last week market opened at 5052.95 & went up to 5138.00 to mark the high of the week.It then continued to decline to register the low of the week at 4806.70 & finally closed the week at 4941.75.Thus it lost 110.70 points during the week over previous week’s closing.This is approximately 2.2% erosion in value. 

RETROSPECT: - Last week our long position of 4865 was stopped out at 4920.

SENTIMENTS: - Market sentiment has turned the bearish with the DUBAI PAYMENT PROBLEM.The memory of LEHMAN & BEAR STERN debacle & it's cascading effects have relived the investor fraternity. 

ELLIOT WAVE THEORY: - The stupendous surge from 3918.75 has compelled us to conclude that the new wave has started unfolding.Therefore now we will concentrate our efforts to analyze the wave count from the low 3918.75 of 13th July 2009.At 4731.45 top on 4th Aug,2009 it has completed wave 1 or wave {A} as five wave upside sequence.Similarly it has completed a flat pattern at 4353.45 on 19th Aug,2009 & in accordance with the previous labelling it will be labelled as wave 2 or wave {B}.From 4353.45 it has unfolded the third leg of the rise till 5181.95 on 20th Oct,2009.Accordingly we have labelled this as wave 3 or wave {C} of the zizgzag.

From the top of the 5181.95 it has declined to 4538.50 in 10 trading sessions.However the internal wave structure of this decline was ambiguous & we could not say with certainty whether it was in three wave or five wave.The subsequent rise from 4538.50 had been sluggish in comparision to decline & could not cross the 5180 in 14 trading sessions..This has compelled us to conclude that either the terminal impulse or the corrective pattern is unfolding.In case of corrective pattern it will attempt to retest the 4538 level.In case of terminal it may consolidate & then attempt to cross 5138 & then 5180.Based on above premises we have marked 5065 & above bullish zone,5065-4860 neeutral zone & below 4860 bearish zone. 

JAPANESE CANDLESTICK:- In the daily chart there was the EVENING STAR FORMATION & there was subsequent decline on Friday.Similarly in the weekly chart it has formed the BEARISH ENGULFING LINE & unless it is negated the decline may continue.

CHART PATTERN:- There is no specific chart pattern is under formation.. 

PULSE-READING:- JKD  soul voice says that be bullish above 5025 & bearish below 4860. 

OUTLOOK & STRATEGY:- Short nifty with the stop of 5045for the initial target of 4800 & lower. 
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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.