Tuesday, November 17, 2015

Nifty showing pause in the fall but await positive confirmation!

Below Research is picked up from 'The Financial Waves Short Term Update' 

Bottom Line: Some buying activity was seen after many days with Nifty closing in green above 7800. We can see range bound action for few days.

Nifty daily chart:

Nifty 60 mins chart: 

Wave analysis:

In previous update we mentioned that, As of now there is no indication of bottom formation and move below 7770 will continue the down move.

Nifty showed good recovery yesterday from the lower levels and prices formed a blue bar after 6 consecutive red bars (excluding the Diwali Muhurat trading). This indicates some buying emerging from the zone of 7700. Also Bank Nifty formed higher highs and higher lows on hourly scale in yesterday trading session thereby providing minor positive divergences between indices. Both of these developments are seen yesterday and so one should be cautious with the short positions as of now.

As there is no base formation we can expect range bound movement before any strong trending move can emerge again. The low formed near 7714 is going to be crucial and break below this level will be crucial to resume the downtrend.

As shown on hourly chart, prices moved very close to the downward sloping red channel. Decisive break above 7870 will break this channel on upside and indicate that short term low is in place. Next 2 to 3 days of price action is important and we are closely observing if there is base formation activity keeping index in a range.

In short, there is some loss of momentum on downside. Partial profits can be booked on existing short positions and remaining can be trailed to the highs of 7870. Move below 7710 is important to resume the downtrend. For now expect few days of sideways action! 

Currently wave (z) is in formation which has traveled only 61.8% of wave (y). This wave (z) is either forming a triangle or a Flat correction pattern and prices are currently in minor wave b of (z).

The last leg of fall has started from 7937 level and a faster retracement above this level is necessary to confirm Price and Time reversal and change in trend. Unless that happens sideways action is plausible over next few days.

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