Nifty: Next leg up towards 5600 or higher!!!

Waves Strategy Advisors Pvt. Ltd.: The Financial Waves research report that was published today morning before 8.30 am and has been giving bullish outlook over last entire week. Please write on helpdesk@wavesstrategy.com for subscribing today or if you would like to have a glance into last week's report! This steep move up has been surprise to many but not to the readers of Financial Waves Short term update.

Bottom Line: Nifty had one of the best weekly closes since the correction that started in February 2012!

  

Nifty Daily chart:

Nifty 60 mins chart:

 Bank Nifty Daily chart:

Wave Analysis:

We mentioned in our previous update that, “The bias remains positive and gapping action indicates impulsive behavior. The faster retracement above 5020 provided first positive confirmation that short to medium term trend has probably changed towards upside. A close above 5120 will break the strong channel on upside thereby providing second confirmation.”

Nifty showed one of the best performing weeks since the correction started in February 2012. Prices managed to rally by more than 300 points in just a week. This is no surprise to our readers since we have been expecting a rally atleast till 5100 levels. Though we expected this rally in corrective form but it has all the ingredients of impulsive pattern so far. Wednesday had a gap up action followed by strong day on Thursday. On Friday prices opened gap down but closed the gap on intraday basis and closed positive. Gapping action alone provides vital information and is indicating positivity.

Nifty has now come close to the resistance zone of 5120 – 5200. It is imperative to see how prices react from here. A move above 5100 will break the downward sloping trendline which is very important. Global markets are showing strength and are supporting the positive outlook.

Midcap and Smallcap index has however lagged the rally so far. Bank Nifty index is also lying at crucial juncture as shown. A close above 10050 will provide positive confirmation from Bank Nifty.

We would advise our readers to follow a trailing stop loss method. If this is a start of next leg up Nifty can now move up towards 5600 or higher. 4990 is now an important pivot level and please trail your stops for long positions to this level.

In short, the bias is positive as long as 4990 is intact on the downside. A move below 4990 will indicate prices are simply correcting the entire move up from 4770 – 5080 before moving up again. A move above 5100 – 5120 will provide further positive confirmation.