The market reaction to the same till now has been volatile as expected. Nifty showed sharp down move towards 6825 and then recovery towards 7090 level. This has been keeping Nifty in a big range. Spikes created on event can act as important support or resistance. So this week is going to be crucial. Bank Nifty has managed to recover from the lows and now trading near 14000 level. From technical perspective, this index has been trading at crucial juncture. Same as Nifty, Bank Nifty has also arrived at the channel support. So what is next from here on?

Below we have shown part of research taken from The Financial Waves Short Term Update taken from the report dated 15th February 2016.

Bank Nifty daily chart: (published on 15th Feb 2016)

Wave analysis: (as published on 15th February 2016)

Bank Nifty has been at all over the places in past two weeks and this index has been one of the major culprits for dragging index lower. It becomes crucial to observe the medium term trend and levels to see if a reversal is possible or we are going to move sharply lower.

We are showing daily chart above that indicates that after the rise from the low of 2014 this index topped out in January 2015 ahead of Nifty. Please note the rise we are marking as corrective to make it in sync withAdvanced Elliott wave method and wave counts shown in our monthly outlook.

The entire down move has now corrected the rise by near 61.8% level in previous week and the index is now very close to breaking its lower trendline support. If we do not see a move back above this trendline than a real panic situation might arise that can result into a free fall. So this week is very crucial and prices have to move back above 14200.

As mentioned earlier it is not very often to see break of downward channel on downside but we will let prices decide where it really wants to head over medium term. We are indeed at very important juncture and the final line in the sand will be ……. levels. A decisive break below this can lead to a free fall with no supports in near vicinity.

Prices are now in wave a of second corrective and there is no indication if it is complete. Move above 14500 will provide the much needed relief and indicate wave b is ongoing, post which final wave c might be more of a consolidation pattern in form of Ending diagonal. But these are all assumptions as of now and price action is most important.

In a nutshell, Bank Nifty is now standing at 61.8% retracement level along with channel. Move below ……will result into a carnage whereas move back above ……. will confirm existing wave structure. Stay alert as this week is going to provide very important signals from medium to long term perspective!

Post publishing the research prices have managed to trade in range and have protected the crucial levels on closing basis till now. So what is next from here on?  

Subscribe to The Financial Waves Short Term Update which covers in-depth research on Indian Equity Markets along with 3 stocks on daily basis. This report also includes Bank Nifty twice or thrice in a month. For subscription visit Pricing Page

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