Wednesday, March 21, 2012

Nifty took a "V" turn...

Nifty had a strong day today after Doji formation thereby indicating positivity.

Nifty Daily chart:
Nifty 30 mins chart:

Waves Analysis:

We mentioned in our previous day’s morning report (21st March, 8:30 am) of Financial Edge Short term update, “If a low is taken out of a Doji bar which is currently at 5230 it will indicate bears are in control and downtrend has resumed. If high is taken out which is at 5300, it will indicate bulls are in control. Also a break above 5320 will give positive confirmation above the channel line. It is now imperative to see which way markets want to head. We again re-iterate, a break of 5170 is required to take us towards 4900 levels. Prices have defended that level in yesterday’s trading session.”

Nifty broke the high of Doji day (formed on Monday) and had a good trend up till 5375 levels. The trend looked good with low intraday volatility. There was no hesitation and as seen on 30 mins chart prices constantly formed higher highs and higher lows. The bias is now positive.

5415 level which we have marked before as important resistance level should continue to be the next important hurdle. A close above this level will provide further positive confirmation that wave c of B down has ended in the form of truncation and next leg up has started.

Time-wise the correction in form of wave B does not look complete, after rally from 4700 to 5650 in form of wave A and prices can move in broader range of 5600 – 5200 to complete time wise correction. However this is not necessary and we would have to see the nature of rally from here to adopt this alternate scenario.

From wave perspective, wave c of a-b-c has probably completed at yesterday’s low of 5233 and we have started wave C up which can take prices above previous wave A high of 5650. We will give probable upside target after decisive close above 5415 – 5425 levels.

In short, the bias is positive given the strong up day and next crucial level to watch is 5415 on upside. Any move below 5295 will indicate that the correction is still ongoing.

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