Nifty w4 almost done completion of consolidation phase by 15th/25th of december likely!!

Nifty unfilled gap 3624-3656 giving support for now. The arithmetic channel was near 3700-3675 and its holding fairly well.
Log t2 is at 3630 and log channel is 3600. That would be 'fib perfection'.
The 'perfect' target for the drop. Remember t3 on upside and t2 on downside that is the rhythm of an impulse.
The market is not always perfect as evident from the action at 3975.
We briefly whipsawed and crossed over this key resistance. We did 4035 then humpty dumpty.

News analysts will say it was crr hike that killed us.

Trendline warriors will say trendline break below 3960.(note whipsaw of the trendline happened at 3866-3800 on 11/20/2006)

Swing traders will say 3860/3794/3774 stop levels were violated.

Funda analysts will say nifty hit p.e of 21.5 which was same as may 2006 top so in fundamental terms u have a DOUBLE TOP!!

P.s I mentioned all of these reasons in my analysis.


Who was right? The answer is everyone is right! Instead of imagining operators and gods who move the markets one would be a wiser if one were to study the principle of Emergence.
"Emergent structures can be observed in swarms and flocks. Flocking is a well-known behavior in many animal species from swarming locusts to fish and birds. Emergent structures are a favorite strategy found in many animal groups: colonies of ants, piles of termites, swarms of bees, flocks of birds, herds of mammals, shoals/schools of fish, and packs of wolves. A more detailed biological example is an ant colony. The queen does not give direct orders and does not tell the ants what to do. Instead, each ant reacts to stimuli in the form of chemical scent from larvae, other ants, intruders, food and build up of waste, and leaves behind a chemical trail, which, in turn, provides a stimulus to other ants. Here each ant is an autonomous unit that reacts depending only on its local environment and the genetically encoded rules for its variety of ant. Despite the lack of centralized decision making, ant colonies exhibit complex behavior and have even been able to demonstrate the ability to solve geometric problems. For example, colonies routinely find the maximum distance from all colony entrances to dispose of dead bodies.
"
--------Quote from site on emergence---------
If at first you don't see the connection between individual ants going about their tasks using chemical trails and trends in the stock market created by fiis+mfs+retail+hni+punters+rookie traders+veteran/floor traders then read a bit more carefully and use google to look around :)

Everyone who trades contributes to the market structure. If everyone has the same view (bullish/bearish) and trades on it then the market is likely to go in that direction. This is the basic foundation of trend following.

My Automated system stop level was 3860 narrow and 3774 wide posted earlier. Once 3860 broke it was retested for resistance and right now the same seems to be happening at 3774. My worst case drop anticipation is still 3630-3600 region (log t2/0.382 retrace of large swing + 0.618 retrace of small swing+log channel). I do not yet have a position in Nifty.
I would like one last drop to my key level so i can get an entry. No offense to all the bulls who are already long :)
I suggest hedging with 3850/3900 call options for december if already long to get some protection from downsides.
Market should consolidate for some time between 3600-3975 before heading for 4100-4450-5000 levels for next year.


The structure of the market would turn significantly bearish on a closing below 3600 at which pointt all bets are off (keep in mind 3975 whipsaw ) above 3600 safe, below 3600 ugly but i can't say there won't be a whipsaw :).