Bottom Line: Nifty finally gave a positive breakout after extended period of consolidation and formed higher highs and higher lows
The below research was published today morning in "The Financial Waves short term update". For subscription options visit www.wavesstrategy.com
Nifty daily chart:
Nifty 60 mins chart:
Elliott Wave Analysis:
In previous update we mentioned that, “In short, close above 8300 will suggest start of upside trend towards 8460 levels whereas move below 8220 followed by 8150 level will suggest weakness to continue in form of wave b.”
Nifty finally managed to give a positive break above the 8300 levels and the Bollinger Band resistance thereby confirming the start of wave c on upside. As mentioned earlier this breakout is in sync with the wave counts we have been expecting to unfold. Also each of the waves has started with sharp up move thereby creating enough euphoria. It will be therefore crucial to observe if the rally extends beyond 3 to4 days and can manage to cross above 8460 – 8470 levels which is 76.4% retracement level of the entire down move from 8627 to 7960.
As per preferred scenario, close above 8300 confirms start of wave c of (b) on upside. The short term upward moving channel is shown on 60 mins chart. Trend will remain positive as long as this channel remains intact. Move back below 8290 followed by 8220 will be bearish sign. But for now as long as these levels are intact bias remains positive.
On the daily chart, we are showing an alternate possibility of Expanding triangle after the x wave. The reason for considering this as alternative scenario is based on the fact that prices have not been respecting the important trendline supports or resistances and has been showing trending moves but within a range. This is usually associated with triangle pattern. So if Nifty manages to cross above 8460 – 8470 levels then we will adopt this possible wave counts.
As per Advanced Elliott wave concepts as well, during complex correction forecasting pattern is difficult till the wave counts are near completion. It is therefore prudent to use other techniques of channels and bias to stay objective.
In short, the trend for Nifty is now positive for a move towards 8460 levels. If momentum continues to build beyond that then we will adopt the alternate possibility of expanding triangle in wave z which can result into touching new highs above 8627. Use 8290 followed by 8220 as very crucial risk management level.
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