USDINR, Nifty - Elliott Wave Analysis

A monthly and weekly fractal charts are attached above for USDINR. Let me make it clear in the beginning, that the EW counts on the charts are not permanent, they are subject to change and are the best I could manage at this moment. Taking it further, I believe we may not have finished the advance that begun in mid 2011. I can see a "rising wedge" type of pattern developing, and we may need another new high before we can think about the completion of this pattern. My guess is we may find resistance around 57.35 range. One caveat though, if we reach the 57.35 level, and reach there in relatively short time span, the technical position need to be checked before making an opinion about the future direction of the markets. Right now momentum indicators are waning with each new high. That should alert us, while expecting more upside in this counter, but there have been instances of multiple divergences and even multiple divergences failing. So stay with the trend till there are clear signs of revealing.

Today, I am proposing a radically bearish count, for Nifty. There is a chance of a wave [5] of wave {B}having failed. Once again, the counts are subject to change, one must constantly measure the technical strength of the moves to keep a tab of developments in the markets. But if the wave [5] failure gets confirmed, we could start our way down on wave {C}, and the consequences need not be explained to an Elliottician. We can see that the momentum indicators are diverging and that is never a good sign. The overall structure of the momentum indicators is not in favor of a long term advance, the technical structure for the whole up move of 2012 is akin to a "bear market bounce" at best. If some critical supports are broken on the downside, we may see the down move accelerating.

On the shorter term though, what is important is to try and anticipate where this current fall, may find support, so that a bounce develops, and we can better position ourselves for a deeper cut, presuming our wave [5] scenario plays out. There is an important gap area at 5530-5455, we need to monitor how prices behave around this level to get a clue about future developments in Nifty.

Note: I don't mind criticism as long as it is constructive. I can't predict the future, neither do I want to, I follow my trading system, and try to share what I have gleaned with those who find it useful to listen my views. Please forget what I have written if you don't find it useful, after all we have all read newspapers (much worse financial media) at some point in time in our life.