Tuesday, November 22, 2011

Nifty short term trend in later stages of down move!

Nifty 10 mins chart
Nifty Daily chart
Excerpt from Waves Capital Short term Update: We mentioned in our previous report, “We would refrain ourselves from forecasting the levels where the current down move should end but would rather adopt an anticipatory method to see if upward correction has started. As long as Nifty trades within the down channel and do not move above 4860 – 4880 the trend remains down. A move above these levels will indicate the short term upward correction has started.”

We have been very accurate in marking these levels as crucial and we can see that from yesterday’s trading range. Nifty made a high of 4854 and reversed back in into the channel. Short term direction for Nifty is now unclear and we would wait for a move above 4860 – 4880 for positive short term move up. A move below the low of 4765 will indicate the downtrend is still on going.

The Wave pattern as seen on 10 minutes chart, it is not clear if Nifty has completed the final 5th leg down or it is still on going. However we can see strong positive divergences across the stocks in Banking, Metals, Real Estate, Auto sectors on smaller time frames. This is typically how 5th waves are created with losing momentum and this is what we were expecting to see. Daily RSI is at 30 levels which has acted as support for previous lows. However we would still wait for price confirmation.

In short, we would wait for move above 4860 – 4880 for positive move or below 4765 for downtrend to resume.

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