Tuesday, April 5, 2016

Why Nifty is falling? Irrespective of RBI stand!

RBI cut the repo rate by 25 bps and tweaked other key parameters as well. Many would now be citing that only 25 bps cut instead of 50 bps and also weak global market resulted into the sharp selloff. But important thing to observe is that this reversal has come after prices came very close to the multi-year trendline shown in below chart.

This simply shows at times it is important to see price action near crucial resistance lines before taking any stand. Also Nifty has now reversed from important levels with strong momentum. So will this fall continue from here on or is it just a temporary glitch?

Nifty daily chart:

For a strong medium term trend reversal and two stage confirmation as per Advanced Elliott wave – Neo wave we required very clear break above the multi-month trendline which has not happened. Also the entire rise has now become in 3 waves instead of 5. An impulsive pattern consists of 5 waves whereas corrective legs move in overlapping fashion. Failure to see a clear 5 waves development indicates that the up move was only corrective in nature.

Does it mean that the buy on dips market is now changing to sell on rallies?

To confirm this scenario we need a break below one important level mentioned in the daily research. This will provide a very good trading opportunity with prudent risk reward levels. Irrespective of the policy outcome prices did what it was supposed to do. The up trend that started post the Budget day looks to be ending with the RBI policy. Stay alert!

“The Financial Waves short term update” is the daily research report that provides indepth analysis on Nifty, Bank Nifty and stocks on rotational basis using Advanced technical analysis and Elliott wave / Neo wave and Time cycles.  For subscription options visit Pricing Page

No comments:

Post a Comment