Nifty(5068.5): It was highlighted here yesterday, that 5115 would offer some temporary relief to the market and a breach of that level would signal a further fall to 5045. Nifty opened lower paused at 5120, bounced gently, consolidated in a small range above between 5120 and 5160 and broke through the morning to clock a low of 5053 for the day.

Yesterday’s price action as greatly reduced the dip from 5400 being a corrective drop and hence we are labeling them as 1,2,3. First things first, if you are short, today’s open or the first one hour might be a good opportunity to take profits, either fully or partially (We nearly got our 5045). The red 4 shown on chart has either started or about to start and it is going to be a bit tricky to  nail the end of this wave (most corrective waves are). Here is the broad idea – once again it looks unlikely that we will see a move beyond 5220. BUT, there is a small possibility that during this corrective rise, we might see a path as shown in the chart, with a small dip below 5000.  OR the morning session takes Nifty to either 5011 or 4985 and the red wave 4 starts from there. We all wish there was an easy way to nail the exact low 🙂 Don’t we?

Open positions:

Long Reliance Nov 2011 840 put from 12

Silver Short with stop at $35.7 from $34.2

Hindustan Zinc Nov Fut Short from 122.5

Nifty Short from Monday morning ( close this today during the first 15mins or 5035-45 whichever comes first)

USDINR Long from 20-Oct-2011 stop 48.3