18 June 2011

Nifty : Charts telling a Lie?

I have been fiddling with my charts for some time. The above Nifty weekly chart has been labelled with what I can say a intermediate term bullish structure. But the fact that it has an ABC marking, tells us that this rally from October 2008 will end soon.

I am not going into the details of %age retracement and time taken by corrective waves. But as of now it looks quite acceptable. So I will definitely keep this count at the back of my head, if things started getting bullish, which I feel right now is so unthinkable, which makes it quite possible!

The labeling of wave A, is picture perfect, bullish guys will count it as wave 1. After that we have a 3 wave irregular correction. And then we see the start of a possible 5 wave C wave. I have shown in the chart that how the current 4th wave is overlapping with wave 1st of C (which makes this wave nothing other than C, bulls would have counted it as 3) Its a very different story if wave 3 is sub-dividing here.

Keeping this count in mind, we can say that we are still pending with some more time of compression. Wave D and E of wave 4 are pending. We can expect D to hit 5700 and E to end above 5400 and then see a 5 wave rally to test earlier highs and all time highs of 6350.

Some of you may ask as to why all of a sudden I am getting bullish. Once I put on my trader hat, I forget all what I have said earlier and did earlier. I need to believe what I see, and be flexible enough to to go from -100 to +100 and vice versa.

So when pessimism is all around you, you have counted infinite reasons for market to crash and placed bets for the end of world. It will cost nothing to have an exit plan, when the universe schemes against you, the market sets a trap and even the charts tell a lie, suddenly you see markets screaming higher for no reason, and all those infinite fears resulting in another short squeeze.


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