Saturday, August 28, 2010

Prices breakdown from Diagonal Triangle (Wedge) after Throwover AS EXPECTED!

As we have been mentioning in previous updates that the throwover looks complete and price shall reverse below 18500, Sensex made a high 18475 and reversed the direction
Even before wave (iii) of v started developing I mentioned in previous blogs that ending diagonal is the likely pattern that should develop looking at the weak momentum and that is exactly what has happened. It is amazing to see when you are measuring the pulse of Mr. Market and understanding the rhythmic movements it is conveying. But please beware we should also be prepared for surprises and alternatives!
Sensex broke below the lower trendline of the wedge on 27th August giving away as much as 250 points from day's high.
The red direction line was shown on the chart after 17th August move and Sensex is catching up with it even now
We expect a move atleast till 17400 level i.e. the start of the diagonal triangle. A bounce from there will tell us if we have completed the major move 5 or just a minor i of primary 5
The sectors that were taking Sensex higher in past few weeks were Banking, Auto and Real Estate which also gave away key support levels on Friday's fall
The market movers like Reliance, Infosys, Tatasteel, Hindalco were already laggards in complete rally of wave v and Friday's down move added key levels breakdown for DLF, Icicibank, Tatamotors. A clear breakdown in smallcap index also added the fact that selloff was across the board
The number of declining stocks on BSE were more than 2000 in past 2 days which is not seen for atleast 3 months now
For intermarket analysts, movements on Sensex has been a great mystery as the fall came on the day when majority of global indices were in green which actually is a surprise since Sensex was exhibiting the tendency since past few months of moving sideways or only drifting (not falling significantly) lower when global markets fall and rallying as soon as get an opportunity to do so.
To summaries: Expect further fall in Sensex atleast till 17400 levels before a significant up correction ensues and nature of correction will convey the further path. A movement back above 18350-18400 level will force us to evaluate alternative scenario


  1. Great analysis in elliott wave.I am wondered.Can you send me the same analysis in NIFTY.My mail

  2. Excellent analysis. I am a silent visitor to your blog since last month. Please keep it up.
    If you could spare some time and post a wave chart of sensex since inception and your analysis.

    Thanks and Regards.

  3. havent seen any extensions in this cycle wave so can possibly be extended 5 waves ,also triangle in 4 spending prolonged time could be another reason for extensions...

  4. Hi Ashish

    I think one thing that must be considered is if you join 2 and 4 and draw a trend line then the extension of it leads to 17700 or so. In this down turn if that trend line is broken, I think that count of this being wave 1 of 5 would be negated and we would have to assume that bigger scale wave 2 has started