IS NIFTY BREAK OUT IS REAL OR TRAP FOR TRADERS? 

Last week market opened at 4983.65 & went down to 4943.95 to mark the low of the week & went up to 5197.90 to register the high of the week.Finally closed the week at 5178.40.Thus it gained 190.70 points during the week over previous week’s closing.This is approximately 3.8% swelling in value. 

RETROSPECT: - We were stopped out on the short nifty of 5145.

SENTIMENTS: - Market sentiment has been quite festive & turned bit optimistic compared to last week due to positive global clues. 

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 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 .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.

From the top of the 5181.95 it has declined to 4538.50 in 10 trading sessions. This we labelled as the wave 4.From the 4538.50 we are viewing as the reumption of wave 5.The wave 5 can have two forms.The first & less probable one is the diagonal triangle formation & this should not cross 5320 in any case otherwise wave count will be negated.This has been shown in green color on the chart.In the second wave scenario at 5138 the first leg of the wave 5 terminated & at 4943.95 the second leg terminated.Since then it is unfolding the third leg of wave 5.For this wave count to be valid it must cross 5320.This has been shown in maroon color on the chart.The target of this third leg comes anywhere above 5500. 

JAPANESE CANDLESTICK:- Last it has formed a long white MORUBOZU candle which has covered the last three week's price action & closed higher.This is certainly a bullish sign & we can expect further upside movement.

CHART PATTERN:- There clean ASCENDING TRIANGLE FORMATION has emerged as shown in the weekly chart above.This triangle formation is just on the verge of being broken out.We estmate that this break out may terminate at 5700-5800 range. 

PULSE-READING:- JKD  soul voice says that all the shops are well decorated for the new year's allocation of FII.The quantum of flow  & urgency deploy the funds will determine the course of the nifty. 

OUTLOOK & STRATEGY:- Buy at every dip below 5320 with the stop of 5110 & on cross of 5320 just do the momentum buying with the appropriate stop.