Trading Nifty on 10-07-2012

Importance of Trendline:
That the trendline from 6339-5630 would act as a resistance is known but how much would it push the price downwards is not known.

Being a descending TL,with every passing day this resistance is coming down and currently stands at sub-5400 levels.

I have been mentioning that the form of C shown above is not yet decided. It can either be a 5 wave Impulse or a Diagonal.
By how much this TL pushes the price shall be one factor to give a definite form to the C wave in play.
Right now,only suggestion that I would make is that one should book out of longs once this trendline is tested.


Now lets see how this C has done so far:

I am not particularly happy with the C2 label as wave 2 should have been either a Triangle or a 3 wave Corrective form.
My friend LPY suggested an alternative labelling:

However,without meaning offence to LPY,I could not convince myself with it as in this running flat "abc" where 'b' goes above 'a' but 'c' fails to go below 'a' (though it does a minimum 0.62*a) again 'a' has to be a 3-wave form ---which it visibly is not and which had in the first place led us to look for alternate labels----

A final word on choosing one of these labels can come in near future----depending upon the depth of the Corrective that we are currently into---

Till then I retain my earlier labels and further labels get the following form:

And as per the trendline, (iv) should be over and we should be moving up as (v) to not only cross 5333.1 but also to test the higher degree trendline somewhere in 5380 zone.

However, we must have a closer look at the path taken by (iv) so far-

As shown in above chart, (iv) has been taken as a Flat abc with:

a(3wave)=5333.1-5287.8=45.3

b(3 wave)=5287.8-5327.1=39.3(87%)

c(5w Diagonal)=5327.1-5258.05*=69.05(152%)

If this c happens to go below 5253.75 tomorrow morning--- that would make c>1.618 of a making this labelling untenable an we would have to call it 123(with 4 & 5 yet to come) from 5333.1

But (wave) 3--- cannot be a diagonal and as this downmove from 5327.1 is a diagonal so we have to relabel it in such a way that this diagonal thing gets explained---.

However,the trendline support and abc count for (iv) inclines me in favour of Nifty not going below 5254 tomorrow.

10.45 AM

Locating supports:

11.03 AM

Breach of yesterday's high confirms the move upwards as (v) target-1 is 5350

Fresh channel & resistance:

Trailing stop loss at 5290.

Partial booking of profits at trendline shown above

12.25 PM

Trailing my profits in longs in following way:

1.20 PM

1.54 PM

Booked profit on 50 %(pre-dtermined bid got triggered) and TSL shifted to 5301.85

And ideally this trendline should become a support now--

And a fresh channel should be drawn:

2.18 PM

Time to book profit on 50% of remaining longs---

To recall our counts:

2.55 PM

Just see where we are vis-a-vis the all important trendline

EOD:

Minimum target of 5353 remained unrealised.

Also the trendline shown in above chart gives more space to move--

Possiblity of opening tomorrow with a gap-up and then sliding down to sub 5258 can not be ruled out.