Wednesday, March 29, 2017

Nifty revisiting crucial 49 days Topping Time cycle, Neutral Triangle pattern!

Bottom Line: Nifty has been fluctuating between alternate days positive and negative closes. Expect sideways action to continue unless crucial levels break!

Nifty daily chart:

Nifty daily chart: 49 days Time cycles

Nifty 60 mins chart:

Wave analysis:

Nifty continued to oscillate between important levels and managed to bounce back on previous day from the important channel support. Participation was seen from underperforming stocks like Axis Bank, Tata Motors which were among top gainers. Nifty had a Gap up opening near 9080 and post that prices traded in a narrow range of 30 points. Majority of sub-indices closed in positive territory. The movement was exactly opposite to that seen on 27th March. It seems the trend is reversing in every two days.

Time cycle of 49 days: It has been sometime since we visited this Time cycle. We have been following this cycle for many years but it lost its importance for a while during strong trending move of 2014. Nevertheless, post March 2015 this cycle has worked very well for catching important tops irrespective of all the euphoria preceding the fall. Infact, the top made prior to Demonetization was also captured by this cycle. As shown on the second daily chart the important tops as per this cycle is marked on the chart. The high made on 17th March 2017 at 9218 was exactly on this cycle day and it becomes extremely important to pay some heed to it now. As per this cycle, the high at 9217 might remain protected for few months. Let us see price action over next few days from here on for further confirming validity of this cycle.

Moving average difference Indicator: At times non bounded indicators provide subtle changes or divergences which the bounded indicators like RSI might not able to amplify. We can clearly see that Price Oscillator indicator that measures differences between two Moving averages has formed a lower high when Nifty touched 9218 levels. This is another reason why we think the momentum on upside is reducing. At the same time the channel slope has changed from blue to black thereby further suggesting reduction in the speed as shown on first daily chart.

Neutral Triangle pattern: The overall structure looks like a Neutral Triangle pattern post wave x and currently wave e of the same is ongoing. This wave e is the final leg of up move which should produce series of divergences and result into distribution. Bollinger Bands have now turned flat with upper end of the band lying near 9140 levels. So let us see how far wave e can stretch from here on.

Price confirmation awaited: As Nifty managed to bounce back from short term channel support and protected the lows of 9018 the near term trend will remain positive unless and until we see close below this level. Price confirmation takes precedence over Cycles and Indicators and we will get negative confirmation only on break of 9018 levels. However, when supporting indicators that has worked well in the past starts to get aligned again it is time to stay alert and not complacent like majority who are expecting strong trending moves further from here.

In short, trend for Nifty will be sideways within a range of 9160 and 9020 levels. We can expect minor positivity to continue as long as crucial support near 9020 is protected. However, momentum indicators with Time cycles and Neo wave application is suggesting the uptrend is currently in matured stages and next few days of price action is very crucial!

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