Monday, October 29, 2012

Nifty Elliott wave count, Channels & Pattern

Bottom Line: Nifty continues to move within wave 4 consolidation. A range bound activity confined between 5720 – 5620…

Nifty Daily chart: 

Nifty 20 mins chart:

 Wave Analysis:

We mentioned in previous update, “In short, a close above 5725 will be positive and indicate an upside breakout whereas a move below 5685 will give short term negative direction towards 5630.”

Nifty moved exactly as expected. Prices broke below the short triangle shown on 20 mins chart and moved down towards the support area of 5630 – 5650.

It is now 14 days and prices have not closed above 5720 or below 5630 during this entire period of sideways action. It has been boring trading environment and many of the stocks in midcap space is also moving sideways. For a trending move to start it is imperative for prices to either break above 5720 or below 5620 levels.

From wave perspective prices are currently in wave c of second corrective pattern. Wave b (blue) formed a triangle as expected.

Normally corrective moves take more time than impulsive moves and as wave 3 has taken 21 days there is possibility that current wave 4 take more 7 trading sessions before starting next leg on upside.

Also it is interesting to observe that except for 1 middle bar in this entire correction all of the bars have formed alternate red and blue bars. Friday’s close was a red bar and so Monday can be a blue bar i.e. close above the previous day’s close.

In short, expect range bound movement to continue further as long as 5620 and 5720 levels are intact on either side.

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