Bank Nifty had been exhibiting a classical higher highs and higher lows a clear Dow theory method. The index has continued to inch higher in classical Diametric pattern as per Neo wave – Advanced Elliott wave.
Always understand that Neo wave helps you to understand the maturity of trend and the probable reversal areas. However, we need to get two stage confirmations which indicate that the trend has reversed. Let me explain this basic concept of Neo wave which is extremely important.
One needs to see number of days or hours the last rising segment has taken. A faster retracement below the trendline that connects the important lows provides the first negative confirmation that the trend is in danger. Later a complete retracement below the last rising segment provides 2nd stage confirmation that trend has reversed and move in opposite side has started.
This is amazing way for confirming that the trend has reversed and thereby providing good risk reward and entering opportunity. Now look at the below chart of Bank Nifty which was published in the daily morning research report – The Financial Waves short term update.
You can see my stock tips and Nifty outlook given on CNBC TV18 over here
Bank Nifty 60 min chart:
Elliott Wave analysis: (mentioned in morning research)
Bank Nifty has continued to move up making a very clear higher highs and higher lows pattern which is seen after a long time. There has been a systematic rise and rotational participation from different banking stocks. As long as the short term chart shows this formation it is best to stay on the long side.
On the daily chart (shown in actual research report)
On the hourly chart we see that wave g is unfolding in the diametric pattern in wave c (blue). Prices are now kissing distance away from the previous top and we are keep a close watch if there is acceptance or rejection near this zone.
In short trend for Bank Nifty seems positive. On downside 30200 is nearest support and break above 30800 will extend this rally further towards 31200 levels.
Happened: As you can see Bank Nifty flirted around 30800 but closed near 30650. There has been rejection near the previous pivot top and we are in wave g which is normally the last rising segment of Diametric. I am now alert and not complacent to see if prices get rejected strongly and move below the end of wave f which is also the channel support. Keep a watch on these levels very closely!
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