1) Nifty from Dec 2010 to the whole of 2011 has made a series of lower tops and lower bottom.
2) During the month of January 2012 nifty has started making Higher highs and lower bottoms. (Brown Line)
3) If we do a Elliot wave analysis as well, the second wave should be over yesterday (Intermediate down trend). The Nifty has retraced more than 38.2% and close to 50% retracement levels of 5070 (5135 being the low), also the Nifty has found support on the Falling trend line (earlier resistance now support)
4) So Wave 1 and Wave 2 are over and as per the rule of elliot wave Wave 3 is always higher than the 1st wave, in short the up move that we will witness this time around should be more than 1000 point rally on nifty (5135+1200=6335) this is the minimum that is expected in the third rally.
5) On the Weekly Charts the Nifty has formed Hammer pattern and if we open above 5295 on Monday the third Wave will start, also a break above 5600 will also mean continuity of the Elliot waves
Regards,
Gaurav Jogani
