Bottom Line: Nifty made a high of 6069
within our topping zone of 6050 & 6100 levels!
Nifty 60 mins
chart:
Wave Analysis:
We mentioned in previous report, “From
trading perspective it is important for prices to show reversal signs near 6050
– 6100 levels. Unless we see reversal bar at those level avoid initiating short
positions as market has been constantly forming higher highs and higher lows so
far.In short, our bias over short term continues to be positive with 5940 as
important level on downside but we remain cautious on long positions as the
trend looks to be in matured stage with immediate target of 6050 – 6100!”
Nifty made a high of 6070 between the range of 6050 to 6100. We continue
to believe that Indian markets are in topping process and should top out
anywhere now. Prices continues to move up on slower momentum and BSE Smallcap
index closed in red due to selling pressure in Smallcap sector during final
hour of trading. Also number of declining stocks was marginally higher than
that of advances which continues to conform to our topping process.
We are showing important channels which have worked very well along with
price ROC that shows strong negative divergence and loss of momentum. The 2
blue channels shown in first chart clearly gives the level of resistances and
supports. At 6100 there is confluence of bigger channel and smaller channel.
Intersection points of trendlines are very important points. One drawback on
using bigger channel is that the degree of error increases with increase in time.
By this I mean that a slight movement in trendline near its origin can result
into big movement in later periods.
If prices decisively closes above 6120 – 6140 levels it might result in
re-entering into the bigger channel and will open up further positive
possibilities. However such price action requires strong momentum on upside
which is lacking as seen from Price ROC below.
From wave perspective we continue to believe that Nifty is in final vth
leg up and this scenario is valid as long as prices does not closes above 6100
– 6120 levels. A move below 5950 will provide first negative confirmation that
an important top is in place.
In short, we do not have negative price confirmation for now and so the
bias continues to be cautiously positive.
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