Will Nifty follow the 6 to 7 days rally pattern?

Nifty Daily chart

Nifty had a big Gap up opening yesterday following the oversold state. We have been expecting positive move up since past 3 days when the break of 4720 turned the last set of bulls into bears. But we had our indicators and wave analysis in place that helped us to predict the turn up again which would have come as a surprise to many!

Nifty daily chart shows a big blue candle out of the downward channel. The trend over short term has changed towards up.

However a close observation of the above Daily chart reveals a very important fact that in all prior instances (since the fall started in November 2010), after every steep move down Nifty rallied fiercely up for 6 to 7 days and ended that rally with a spike. It then turned down on the 7^th day taking back prices to where it started matching the momentum of uptrend. The magnitude of rally has ended between 38.2% - 50% on prior occasions. If the similar pattern and cycle has to continue we will rally for 4 more days (2 days of rally is complete) till 4940 levels and should turn down from there with a spike.

Time will tell if this short term cycle is still intact! In short, the trend remains positive for this week and strong resistance comes into play around 4920 – 4940 levels.

Nifty has started the upward correction of the entire move down from 5300 to 4640

Nifty 10 mins:

Nifty Daily chart:

Nifty on Friday failed to move up thereby living upto the Friday’s negative expectations! On 10 mins chart, we can see that the short term trend channel is broken and prices have started the upward correction of the entire down move from 5300 to 4640.

The previous 4th wave as shown comes near 4910. We should correct atleast for a week in an overlapping structure. As long as prices remain above 4640 we stay bullish. The up going trend is already exhibiting an overlapping structure as a correction opposite to the higher degree trend should behave. This also confirms the intermediate trend has turned down and we are just correcting extremely oversold condition over short term.

As we mentioned previously, a move above 4780 would help Nifty inch higher towards at least 4900 or even higher towards 5000 now. While a fall below 4638 would negate our expectation of a short term pullback.

Nifty short term trend in later stages of down move!

Nifty 10 mins chart

Nifty Daily chart

Excerpt from Waves Capital Short term Update: We mentioned in our previous report, “We would refrain ourselves from forecasting the levels where the current down move should end but would rather adopt an anticipatory method to see if upward correction has started. As long as Nifty trades within the down channel and do not move above 4860 – 4880 the trend remains down. A move above these levels will indicate the short term upward correction has started.”

We have been very accurate in marking these levels as crucial and we can see that from yesterday’s trading range. Nifty made a high of 4854 and reversed back in into the channel. Short term direction for Nifty is now unclear and we would wait for a move above 4860 – 4880 for positive short term move up. A move below the low of 4765 will indicate the downtrend is still on going.

The Wave pattern as seen on 10 minutes chart, it is not clear if Nifty has completed the final 5th leg down or it is still on going. However we can see strong positive divergences across the stocks in Banking, Metals, Real Estate, Auto sectors on smaller time frames. This is typically how 5th waves are created with losing momentum and this is what we were expecting to see. Daily RSI is at 30 levels which has acted as support for previous lows. However we would still wait for price confirmation.

In short, we would wait for move above 4860 – 4880 for positive move or below 4765 for downtrend to resume.

Silver fall Predicted exactly 24 hours before - Waves Capital

Silver anticipated on 16th Nov 2011 (before 24 hours)

Silver Happened 17th Nov 2011 (after 24 hours)

Chart courtesy: Netdania

Silver fall of more than Rs. 3000 was predicted exactly 24 hours prior it happened in the short term update report of Waves Capital. We published this chart to our International commodity report subscribers. The above chart needs no explanation and even the low marked exactly after 24 hours was at $ 31 as forecasted in first chart by red line. It is simple a thrilling experience and wanted to share across with my readers!

Nifty at crucial Juncture!

Nifty 30 mins chart:

Nifty Daily chart

Nifty gave a gap down opening on Friday and failed to rally back for the entire session to close the gap. However prices managed to close at 5168 levels above the lower end of the support at 5160 we have been mentioning for some time now.

Nifty daily chart shows a doji formation which indicates indecisiveness. Given the rally in US and European markets on Friday it will be crucial to observe how our markets react to this and if we manage to open gap up & whether we will be able to sustain there during the day.

A failure to sustain above 5150 levels will break the strong support zone and will confirm next leg down towards 4800 and lower has started. If prices manage to rally from here we can move till 5260 the upper end of the short term channel shown in 30 mins chart.

In short, it is very crucial to observe how Indian markets behave today and whether it manages to move above 5260 or below 5150 for clear directional breakout. However, a move above 5260 will take it only towards 5350 and not more than that. Eventually the X wave will get complete in few more days if it is not already complete and a steep down move has to start sooner than later!

Nifty continues to consolidate! One more retest of 5390 plausible..

Nifty 30 minutes chart:

Nifty Daily

Nifty 30 minutes chart shows that there is hardly any movement in Nifty and the sideways action is continuing. We can see a short term blue upward channel and prices are moving well in that channel. We are at lower end of this band and prices should now start rallying towards 5350 levels as shown.

Nifty daily chart shows that prices have moved out of the blue channel but failed to move down. This happens when markets are just consolidating and we have been expecting that. We are optimistic for the level of 5350 – 5380 to be tested again on upside. However we do not see this move up as start of strong rally but to terminate from around 5400 levels at the top. A close above 5450 will however indicate the current up leg is extending further.

As we mentioned earlier, from wave perspective we can see wave Y is subdividing into double three combination with first standard pattern as zigzag followed by minute x wave and another standard corrective pattern either flat or triangle is forming.

In short, we maintain sideways action within the range of 5180 – 5380 over next few days. Bias for today remains positive with 5200 as crucial support level.