Monday, February 7, 2011

Serious Capitulation Plausible!

Nifty Daily
Nifty 60 mins

Nifty touched the lower boundary of the corrective blue channel as shown on the daily chart near 5550. We do not see prices going farther away from there. A break of 5450 on downside confirmed that the prices are resuming the downtrend. We are measuring the pulse of Mr. Market very accurately. On Friday Nifty made a high of 5556 and reversed to close the day at 5390. The moment it broke below 5450 prices went down impulsively to touch an intraday low of 5369.

Fractal Nature: RSI has been reflecting a pattern valid on different time frames. We have circled the areas of RSI on 60 mins that reflects similar patterns from larger to smaller time period. RSI has been struggling going up as seen on all 3 circled patterns and very easily moving down. This just confirms that the trend still remains down and we do not have indication of momentum loss as yet.

We can now indeed be in a 3 of 3 of C/3 and so prices can just start capitulating lower and lower without any buying. We would have liked to avoid such strong statement but the chart structure and pattern development forces us to give higher probability to this scenario. Please do not buy in into rally if any happens. We would state it here if we go wrong and prices convey the next best probable scenario. Till then we stick with extremely bearish wave counts!

5550 is now extremely crucial resistance level and a move above it will raise the odds of alternate possibilities. As seen on daily chart 4800 now is the next very strong support zone that marks 38.2% retracement of the entire rally that started in October 2008 and also the previous 4th wave support level.

We would like to convey that predicting the future is always a probability and not certainty. We have been pretty accurate lately but we would still like to have alternates as plausibility and would visit them as and when we see current forecast going out of track. For now lets move with the bigger trend and let market provide indication if it is exhausted falling. Till then enjoy the fire crackers!


  1. Looks like we have made a bottom here.I guess nifty 5200 is the bottom and we go higher from here atleast 200++ if not more.There is a good chance that this fall is over and done with if we manage to stay above the current levels for a few weeks.

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