Nifty EOD 6.3.2012

This single question has been asked many times during last few days and today also three of my friends posed it again:

Why am I not labeling the down move  W4 as ABC which is doing as follows

 A Corrective ABC can be either a zig-zag or a Flat.

 As a triangle this Corrective has to be ABCDE.

And as a Combo it has to be abc-abc-abc which is termed as WXY where W , X  and Y represent different corrective forms on stand alone basis.

Form of A guides us towards the form that a Corrective ABC is going to take.

If A is a 3 wave form(a zig-zag in current case),a bigger zig-zag (ABC) gets ruled out as a zig -zag is 5*3*5.

So we are left with two options only for  Corrective ABC---Flat or Triangle.

In a Flat,B has to retrace 90-138% of A, which is not the case in current scenario. So the Flat also gets ruled out.

Now we are left with triangle whose three forms-barrier,contracting,expanding donot match with the current corrective so triangle also gets ruled out.

The only Probability of the downmove from 5629 getting labelled as ABC was where B would have played out an Expanded Flat in following manner,to retrace about 90% of A:

This Probability had arisen during the day today but didnot survive long enough.

So the only way to label W4's constituents till today morning was WXY where

W=zig-zag abc(5629-5461-5521-5268)

X=zig-zag abc(5268-5384-5351-5459)

Y= zig-zag abc.(5459-5298-5392-5266*)

But today's Intra-day moves have changed the labels to following:

So the first target for tomorrow remains 5186 where shorts are to be closed and then longs gradually to be built up.

That means W4 label is no longer valid. The first Impulse had its top at 5629. Now we are into a Corrective to the Impulse 4531-5629.

For understanding this downmove better,following chart would be more useful:

And my trade-set ups would be following the above chart .

Raghu