NIFTY Outlook

This week has been very kind to me, and all traders who traded short on NIFTY. We had a good run of about 300 points on NIFTY.

NIFTY Futures held 4800 level to touch the weekly LOW at 4801, and bounced back sharply by 50 points to close the week around 4850. It is important to note that the weekly close is below the 75% level of last range, which is very critical.

My view is that the downside is not yet over. I did expect NIFTY to achieve our target of 4734 this week itself, but it did not. I am confident that we will see our target of 4734 achieved within next 1-2 trading sessions.

What next?

GANN said that the markets generally move in 3 sections. When you look at the NIFTY movement since Nov 2010, you will notice that:

- It ran down from Nov 5, 2010 at 6349 to Feb 11, 2011 at 5175, thus making a range of 1174 points in 98 days. (1st Section)

- It ran up from 5175 to 6000, making a high on Apr 5, 2011 , thus a range of 825 points in 91 days. Both Price and Time ranges were lower than the range made on downside.

- It ran down making a double bottom at 5182 on 20th June. Some can call it the end of section 2, but I have a different view. When it ran up from 5182, it was unable to go past 50% level off the 1st Section range. There was a strong resistance also in form of a GANN angle (trendline drawn) from Nov 5, 2010 TOP.

- On 8th July 2011, it made a HIGH at 5760, which was exactly 50% of the 1st Section range. It started its 2nd Section, which I expect to get completed around 4734. We don't yet know if the second section is over, though I think so.

My view is (and my may be wrong), after touching 4734 NIFTY is expected to run up to around 5200 level, which is a major resistance now, especially in view that it was a double bottom as well as there was a GAP which has not been filled. Thereafter, NIFTY would run down around 1000 points, down to 4200 level, and this journey shall be completed in about 6 months. And this shall be the 3rd section of the bear market that we are in.