Trading Nifty on 19-07-2012

Daily charts show that the LTL of upward channel has been tested but 5DMA-20DMA bearish cross-over,RSI-14 at 52.6 and MACD are not signalling any end of downmove as yet. Being lagging indicaters they have only that much of significance but had RSI been in oversold zone while this LTL was getting tested,I would have gone for OTM longs but not now.

But Hour charts(shown below) are showing upward momentum building up--5/10ema &MACD bullish cross-overs and RSI still half-way from overbot point shows room left for more upmove.

Whether the upward momentum building up in Hour Charts sustains and gets transmitted to Daily charts or it fizzles out remains to be seen.

When I try to match my labels with Channel,I get following Probability:

Only hitch here--as already mentioned--is that logically on completion of C3(ii)TA indicaters should have come into oversold territory in Daily charts(which they have not).

So we have to keep an eye on alternate labels which see C3(ii) not over as yet:

Then what would be the deciding factor for choosing one label out of the above two?
5267.1 is the threshold
If we tick above 5267.1 we should be ready for a fast & furious upmove as C3(iii)


First indication would come from the form of upmove from 5169 started yesterday--- if it takes a 5 wave form then balance shall tilt in favour of bulls. It has so far done:
5169-5201=32
5201-5186=15
5186-5223*=37 so far---
if Nifty opens above 5238 that would be an indication of a 5 wave form

Trading strategy for the day would depend upon the opening---
If we open above 5238 then we shall have a green day and all dips should be bought ---and playing short should be avoided.
And if we happen to tick above 5267.1 during the day--- longs should be kept overnite---
10.30AM
Gap ups does not allow one to find out wave form so with today's gap up we are not able to assign a form to the upmove 5169-5257.55.
But normally gap ups mean Impulse so the most logical choice form me is to take this 5169-5257.55=87 as an Impulse which is currently getting retraced---and may get retraced to even 80%=70=5187
Other probable retracement points are-38%,50% and 62%.

12.38PM
As mentioned earlier,very difficult to decipher the wave-form when a gap occurs but to me it seems:

EOD
Listless day as far as Nifty's intra-day moves are concerned but  the threshold 5267.1 was not breached but formwise this upmove of yesterday and today can not be seen as a corrective form so the emphasis on the labels:
A=5348-5218=130
B=5218-5267.1
C=5267.1 downwards wherein
C1=5267.1-5169=98
C2=5169-5257.55*  looks weak now because not only does this C2 doesnot have corrective's characteristics but also it has retraced more than 90% of C1 breaking two important trendlines in following manner:

.

So the other Probability of
A=5348-5218=130
B=5218-5267.1
C=5267.1-5169
and fresh upwave from 5169 looks to have more weightage now.

Though the final word would come with a breach of 5267.1 only----