Nifty Step-up move continues: Next few day's trading action to give important clues for Wave Structure...

 Nifty Daily Chart:

Nifty Daily chart: A step up rally continues…

Nifty 60 mins chart:

Nifty had a very good week and closed on Friday near the week’s high. Prices rallied from the low of 4827 and made a high of 5065 on Friday. Real Estate, Banking and Metal sectors had very good rally and smallcap, midcap stocks showed very good impulsive moves not seen in past entire year of 2011.

As seen on daily chart, prices continue to give respect to the upper trendline of the blue channel from where it took support on Friday and rallied steeply during final hour of trading. Reliance results as per newswire were below expectations but we would refrain from commenting how this will impact stock prices today as we have seen TCS, even after declaring results in line with expectations reacted negatively.

Nifty second daily chart shows a very bullish outlook, given the step up move shown. We can see that since the bottom at 4600 prices has moved up 1 day then corrected for 5 days, after that prices moved up by 1 day corrected by 4 days, then 1 day up corrected by 1 day and 1 day up again yesterday. Time wise corrections are getting smaller and the rally looks to be getting steeper. We have shown that there is increase in the degree of rally when measured against the horizontal axis. This is very bullish to us and usually happens during 3rd waves. Such scenarios do not happen that often and are rare species seen on charts during corrections. However the caution sign is magnitude of each up day. We are not seeing each up day bigger than the previous up day and so we will keep the options open as this up move as corrective and not impulsive. Either ways the rally should continue up and from trading perspective do not make much difference.

Nifty 60 mins chart shows that 4945 which was previous resistance should now act as support and please trail your stops to this level. As long as this level is intact we remain firmly bullish and prices can reach 5100 and plausibly higher. Today’s and tomorrow’s action will now reveal if we are indeed in 3rd wave as any smaller rally from here will raise the red flag.

Readers of our report, who are long since 4685, please trail your stop now towards 4950 levels!