Cash The Chaos

Nifty(5039): A small range bound day post a big move is a normal market behaviour as market participants take stock of the move.

We have an inside day bar and a "doji" pattern on the daily charts. A move past the boundaries usually provides a good short term trading opportunity. So watch 5002 on the lower side and 5055 on the higher side for a quick 30-40 point intraday day move (Caution if Nifty opens above this level in the first 5-10mins).

Resistance: 5110 and 5165

Support: 4955 and 4870. Watch 50DMA at 5020 too.

Open positions: Silver, Heromotors, OFSS, Apollo Tyres.

Nifty(4832): The day was ranged between important supports of 4725 and resistance of 4866 though an erratic and volatile day with a mildly positive finish. Now given the global euphoria about cheaper dollar swap lines, Nifty is very likely to take the double three corrective outlined here in yesterday's technicals.

Nifty - intraday charts

The resistance at 4980 is going to become important today, and if by some chance markets exceed 5000, It would do a world of good from a contrarian point  of view- weak bears would fold, fundamental traders would think the low at 4640 was THE LOW and world would  become a better a place because the central bankers "solved" the problem of insolvency with cheap credit!!!!

The level of 5065 is the level of a previous fourth (red horizontal line on chart), most corrections end around the previous fourth or slightly below. The volume footprint has left 5015 and 5040 as important levels for market activity. So be aware that the zone of 5015-5065 is a big resistance cluster. So those of you who have been saying you are high risk traders in the comment section, this is the zone you need to step up and stand in front of the market.

Open positions:

Same as yesterday. Hero Honda if it comes to 2130 (unlikely) do not close, the stop is likely to get revised to 2195 and we may stay on for the bigger trade to 1750-1400.

Nifty(4851): Finally, the long awaited relief rally kicked in and the markets are relieving the oversold levels. I do not think market should have any problem going above last weeks high of 4873 but if it doesn't its bearish and the powerful wave down is still incomplete. The ideal levels for this relief rally to roll-over to the downside are at 4901- 37 and 4983.

Nifty hourly chart

As per my time series analysis, December 8th(+ or - 1 day) points to an important high or low. I'm going with the probability of this being a low for two reasons (a) As can be seen from the chart above red wave 5 is still pending ; (b) Seasonally, December is one of the best months for India and India has not had a negative December for the last 9yrs. Hence, if we have a low on December 8th, markets could still be seasonally bullish and have another relief rally.

Ok now to yesterday's post - On yesterday's post - I had intentionally left an error, hoping one of you, particularly the Elliott Wave fans amongst would point to this error. The correct chart is here:

Nifty Daily chart - EW count

Now you EW fans- can you guys tell me what was the intentional error that was planted on yesterday's chart? I was just checking if you guys were paying attention to these notes 🙂

Open positions:

Silver: Short @$34.2 with revised stop at $33.5, partially booked @$31.4

Apollo Tyres: Long @64 stop 59, Target 71

Hero Motors: Short @2025 stop 2130 Target 1900 (greater bearish potential beyond 1900)

PS: I'll be on CNBC this morning. Will talk about Apollo and Hero if they ask about specific recommendations.

Nifty(4706.45): The move from 5325 has been one of the strongest 'extended' waves I've have seen in recent times. When a market extends so strongly, relief rally that follows such extensions tend to be quite weak. So given this technical backdrop, the odds of this market exceeding 5000 now looks quite low. The ideal level for the relief rally to stop would be 4985, assuming the low markets made yesterday holds.

Supports remain the same: 4650 and 4530

Resistance are projected at 4790 and 4835

Open position(s):

Silver: Short with revised stop of $33.5 from $34.2

Positions closed yesterday:

Nifty November Long Guts(4900 put and 4800 call): Opening spread 184; Closing spread 250

Nifty(4778.35): Given the ferocity of the decline from 5325, let us re-visit the big picture of Nifty and see where we are in the larger trend.

Nifty - Daily Charts with wave count

The speed of the decline is definitely of that of a third wave, which we have been marking as one on the daily updates. The possibility that we might still be in the 3rd wave in the bigger picture too is now a possibility. The implication of that is that there might one more leg of decline like the decline from April to August, after this downward leg is complete. This would work well with our call for INR 57+ to the dollar. It is also possible that green circled area shown on chart is a wave 4 of C of green Y. Either case, Nifty should drop closer to 4400. If Nifty breaks 4720 without a pause, the odds that we are still in the third wave (purple 3) would gain more weight. We will update on the bigger picture as things evolve.

Short term: Given that Nifty has been relentlessly dropping from 5325 to 4764, it is very doubtful it may have the energy to break the big support of 4720. A bounce to 5000+ would be the bare minimum but as we have been seeing extended waves are very difficult to pin down. In case, 4720 is broken supports to watch are at 4650 and 4530.

Open positions:

USDINR long from Oct 21st - Take profits here today (52.3 was November Fut close) - RBI will come under intense pressure to intervene. We will get in on a pullback for the next target of 57+

Silver - holding with upgraded stop of $34.2. Take Partial profits @$31.4

Nifty Long Guts: November with a debit spread of 184-188.