Bottom Line: Nifty had a strong up move after closing above the previous high of 8460 levels. Trend will remain positive unless we see close below previous day low.
Nifty daily chart: Neo wave plot
Nifty 60 mins chart:
In previous update we mentioned that "trend for Nifty is positive as prices managed to take out 8445 followed by 8460 levels. The next resistance zone is near 8550 and we are closely observing if Bank Nifty can manage to follow Nifty this time by taking out its earlier pivot highs"
Nifty had a positive opening in the previous session near 8500 levels and prices continued to show strong momentum throughout the day. Buying pressure intensified during final hour of expiry day with the pivot high of 8600 also taken out by closing. It is not very often to see such frenzy buying that too from stocks that normally are not top gainers - Kotak Bank, Bosch, BPCL, Adani Ports, ZEEL, HDFC. All of these stocks were the top gainers in Nifty that helped it cross above 8600 levels. It seems buying is now spreading to different variety of stocks. With the Budget scheduled on 1st of February volatility is going to be norm over next few weeks.
At times it is important to look at the chart using the precise Neo wave plot that highlights each wave movement very clearly. The daily chart shows the movement in the form of each mono wave that connects together to form poly waves. The entire rise from the lows of 7900 has been in the form of Diametric pattern that played out exactly as expected. Post that the correction was only in the form of wave x. We were expecting a deeper move given the Time cycles but it seems that only resulted in sideways action that protected 8320 level break of which was required for negative confirmation. The Gap area of 8280 - 8320 also remained protected that helped index to form wave x. We are showing the modified 0-x line which is the most important trend line now. Complex corrections are normally channelized and prices are approaching towards the upper end of this channel.
8670 - 8680 is now important channel resistance on upside and if Nifty has to move beyond this in a day or two then we have to see a near vertical rise with broader participation. Interestingly on Wednesday there were only 54% advancing stocks. Let us see if more broad based rally can pick up from here or Nifty after a Gap up opening start showing exhaustion signs near the channel resistance.
For now trend will remain positive as long as we do not see close below previous day's low. Ongoing leg is wave a after wave x and post its completion we will see few days of sideways or negative action in form of wave b. Important support is now near 8425 levels which is the channel support.
In short, trend will remain positive as long as 8425 level is intact. It will be important to see if Nifty can sustain the Gap up opening above the channel resistance shown on daily chart which is near 8680 levels.
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