Nifty:EOD 17.2.2012

First of all let me put up the most notable aspect of today's EOD chart:



Although it needs confirmation but it has the potential of being developed into an evening star.

Those who are following my blog on regular basis,know that we have two Probabilities on Higher degree:
1.That Correction started from 6339 (Diwali 2010) has not ended yet and current upmove from 4531 is wave C of X which is developing as an Exp Flat from 4728 upwards:
X.A=4728-5400=672
X.B=5400-4531=869(129%)
X.C=4531 can go upto 5618(=1.618*XA)
2.That the Corrective from 6339 has already made a bottom at 4531 and we are into Ist Impulse of the fresh wave that has started from 4531 upwards.

I am inclining towards Probability 1,because I have not been able to assign a convincing labeling for the Corrective 6339-4531 to have ended at 4531 and am more comfortable with Probability 1 counts which are there in Special Updates section now for quite some time.
And as a breach of 5618 would invalidate this Count,I have been referring to 5620 as last post of Bear Hopes.

A common point of both the above Counts is that both these are seeing upmove from 4531-5607* as Impulse(though my Guru Wave-Rider ji has been counting it as abc-x-abc-x-abc---)
And this Impulse has to have a Corrective also.
So the differnce between the two counts is the depth of this Corrective.
While Probability 1 takes it below 4531;
Probability 2 says that after the Corrective(which shall not take us below 4531)we shall rise like a phoenix and make new highs.

So much for higher degree Counts.

Now coming to current Impulse,as I mentioned two days ago also,there have been only two SOLID reference points so far in this upmove:
W1=4531-4800(269)
W2=4800-4588
W3=4588-5607*=1019(378.8%)

And there was another pausal-point at 5078 which was taken by me for few days as end of W4 and beginning of W5 but the move above 5458 invalidated that.
And as I have mentioned earlier as well,it has been my observation thatwhenever W3 is more than 300% of W1,a distinct W4 and W5 become difficult to be figured out and I take them to having been subsumed within W3.
Something similar seems to have happened here as well.
And that,in a way,also explains why at times fractals of W3 (or W5) were not able to be correctly labelled by me.That also has a lesson within it --- never treat EW as a single,stand-alone tool.Momentum must be seen alongside it.
However,another stark observation for me has been the special points--EW pivots as I call them---help us to set up trade on basis of EW. 3-4 days ago,I had mentioned 5444-5455 as shorting range with SL at 5458.Nifty opened above 5460 to tell us that momentum is not by our side.Similarly,for today I has mentioned that if we donot go below 5510.45,our chances of going up by minimum 1.62*26.6 are very high but we should not go above 5575.And we opened above 5575.Thus these sharp EW pivots not only tell us very early that we are on wrong side of trade but also prevent us from starting the trade.

Have a nice week-end.See you all on Monday evening/Tuesday morning with my trade set-up.But ,then let me post a brief understanding of today's down-move:




Raghu