Nifty:EOD 18.11.2011

First of all, some inferences are being stated EXPLICITLY. May sound blasphemous to hard-core EW followers. But these are based upon my observations & experiences and would become ( & may be have already become) part of my guiding lights:

1. Copy- book fractals like 5 sub-waves are not always found in Motives as the fast & furious momentum "eats" into them.So Fib percentages and momentum reversals have to be used to define the end of a motive;

2. In the absence of full 5 wave fractals,it remains a matter of debate to label the degree of the retracement that sets in at a given stage;

3. When a 3rd wave motive has set in, it is not possible to mention its end-point as it can be an extension ranging from 1.62% to 425% and other classical TA tools have to be utilised to figure out the probable supports/resistances corresponding to various probable Fib percentage extension points. But these also have indicative values as momentum of the motive can demolish these very easily.

4. Hourly Chart counts may not always get assimilated in the Daily Chart Counts and some "stretching" may be required to fit them in the Daily Charts,particularly in case of gap-ups/downs.

In such circumstances,any trade initiated in anticipation can cause much harm so best policy is to "join the party after it has begun" i.e. when the momentum indicators clearly show the reversal and the first "higher high higher low" appears on the 5 min charts, one should get in and start counting the fresh wave.

Now ,with these "explicitly stated" limitations of EW ( that is not to say that EW has no other limitations, more would be mentioned in future as & when "context" demands) lets move towards our count:

Till yesterday,our Hourly Chart was giving us following Counts ( and these were fitting very well into Daily Charts):

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-- downwards Target minimum is 1.62*198= 320=5006 as a 5 wave form :

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)= 5229- downwards, should ideally be taking Nifty to 4930 as a 5 wave form

5229-5121=108

5121-5159=37

5159-4990=169

4990-5065(4990-5065-4992-5036.55-5019).

5019-4919*

Today after the gap-down,this wave 5019-4919 went upto 4838 and as such,it shall not be possible to "cleanly" fit it into previous fractals.Leaving us with two options:

Option 1:

Consider (iii) of SW3 over at 4838 thus making (iii)=5229-4838 and (iv) having sarted at 4838 upwards,thus SW3 should be seen as

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)= 5229- 4838=391[212.5% of (i)]

(iv)=4838-4915* and retracing 38.2% of (iii) can test 4990 as a 3 wave form;

Option 2:

SW3 itself may be over, thus giving us the Count:

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-4838=488(250 % of SW1)

SW4=4838-4915* and retracing 38.2% of SW3 can test 5025 as a 3 wave form

Thus we have the uncertainty of labels,

but certainty of direction and targets--

Being a 4th wave Corrective, complexity would be inevitable-- a Flat form is more likely or a combo?

Nobody knows--

Best of luck.

Raghu