Trading Nifty on 22.5.2012

So Ya=5342-4789=253
Yb retracing 61.8% means testing 5130:
As extended fifth gets fully retraced so that gives another reason for Yb reaching 5130.
So the best trade would be to go positional long for this target of 5130.

However this target is not going to be a one way smooth process.
Yb has to be a 3 wave form--Yb.A,Yb.B and Yb.C


Current upmove---4789-4937*-- is part of Yb.A
This YbA can follow many patterns---most simple being 5 wave Impulse or 5 wave Diagonal.
I shall be discussing only these two Probabilities( but that does not mean elimination of other Probabilities) and do bear in mind that both these Probabilities would become invalid if we tick below 4861 


Yb.A as a 5 wave Diagonal:

So tomorrow if we open below 4889
Go long with Stop-loss at 4861
Target 4940


Yb.A  as a 5 wave Impulse:

Thus if we donot go below 4889 chances of crossing 5000 tomorrow would be higher.
However if we go below 4889, chances of our getting restricted to 4940 would be higher.
Stop-loss for both these Probabilities is 4961.


8.30 AM
Going by the global clues,probability of 4889 being breached in the morning is almost NIL.
That means no overlap of (i) and (iv) and therefore no chance of a 5 wave Diagonal.
Does that mean 5000 would be breached  today(as mentioned in Probability 2?
Not exactly. Infact just as I was emphasizing watching 4889 till now for overlap, now I would suggest watching 4956.
What is the significance of 4956?
As (i)=4789.15-4889.4=100.25
(iii)=4861.05-4933.25=72.2
(v)=100.25/1.618=61.95=4894.5+61.95=4956.45
That would make (i) extended vis-a-vis (v)--thus fulfilling the criterion for a 5 wave Impulse.
So watch the 4940-4956 band carefully and carry longs only if we manage a tick above 4956.5.

And one must watch the following two charts consistently during the day for catching the top and dip with the help of cross-overs in over-bot and oversold territories--to compliment EW counts.

10.45 Am
Facing some problem in chart posting.
Make a trendline joining 4789 and 4894.That would be the first support today.
The degree of current retracement would be defined by the tick below yesterday's low.

4938.5 should be the trailing stop loss for shorts---

11.25 AM
Smallest degree waves are quite difficult to decipher.
We might still not have formed the day's low as per following pattern---

12.20 PM
Minimum c=0,62*a
meaning 4922

1.15 PM
Degree of retracement has been defined.
One Impulse over at 4956
Retracement to 4850 likely

2.40 PM

3.10 PM
It has become a tradition nowadays to close at lowest or highest point of the day.
However the retracement has fulfilled all its conditions--

EOD
All I can say is:
JAI HO EW KEE !!!
Now back to 4956+ zone
And should we apply Fib ratio to Time analysis also?

Raghu