By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com
An Exhaustion Gap is a gap that occurs after a sustained rally and is normally a 3rd or 4th Gap in anupmove. First confirmation that the Gap is of exhaustion nature and not run away Gap is obtained once the Gap is filled either on the same day or next day.
Post pattern implication of this pattern is that the next leg will probably start on downside oratleast sideways action is expected for few days.
A classical example of this exhaustion Gap can be seen on Nifty where prices opened today with almost 50 points Gap up and closed the Gap within first few hours of trading.
Nifty past history: WhenNifty was making a high near 6050 – 6100 in late January we warned our subscribers of a very important top is in place for months to come and not to get carried away in the euphoria. We projected 5550 to 5600 as our target area on downside. Nifty made a lowof5470 on 10th April.
10th April 2013:We published an intermediate report during market hours that stated - Nifty has managed to show good reversal from the bottom and has so far retraced the down leg in faster time. This indicates that the short term bottom is probably in place. Please have minimum positions on short side and if prices manage to close above 5600 then exit all your short positions.
Happened:Nifty has till date protected the lows of 5470made on 10th April exactly as expected.
17th April 2013: We used Fractal nature to predict the up move from 5600 and stated the following - It was on January 07, 2012 we predicted an up move towards 5650 from 4650 based on the setup, which happened and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output.
Happened: Nifty spot made a high of 5963 within the target zone of 5900 – 5970 we have been mentioning since past week.Nifty: An Exhaustion Gap TODAY? Next Trading Strategy!!!
An Exhaustion Gap is a gap that occurs after a sustained rally and is normally a 3rd or 4th Gap in an upmove. First confirmation that the Gap is of exhaustion nature and not run away Gap is obtained once the Gap is filled either on the same day or next day.
Post pattern implication of this pattern is that the next leg will probably start on downside oratleast sideways action is expected for few days.
A classical example of this exhaustion Gap can be seen on Nifty where prices opened today with almost 50 points Gap up and closed the Gap within first few hours of trading.
Nifty past history: WhenNifty was making a high near 6050 – 6100 in late January we warned our subscribers of a very important top is in place for months to come and not to get carried away in the euphoria. We projected 5550 to 5600 as our target area on downside. Nifty made a lowof5470 on 10th April.
10th April 2013:We published an intermediate report during market hours that stated - Nifty has managed to show good reversal from the bottom and has so far retraced the down leg in faster time. This indicates that the short term bottom is probably in place. Please have minimum positions on short side and if prices manage to close above 5600 then exit all your short positions.
Happened:Nifty has till date protected the lows of 5470made on 10th April exactly as expected.
17th April 2013: We used Fractal nature to predict the up move from 5600 and stated the following - It was on January 07, 2012 we predicted an up move towards 5650 from 4650 based on the setup, which happened and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output.
Happened: Nifty spot made a high of 5963 within the target zone of 5900 – 5970 we have been mentioning since past week.
Following chart was published today morning along with Nifty daily chart and Advance decline chart (not shown here)
Wave Analysis:
NSE Advance decline ratio (shown in today’s morning report)is providing some very interesting observation. There was a classical positive divergence when Nifty moved from 5650 to 5470 levels and Advance decline ratio did not make new lows. However, the up move from 5470 to current levels shows a strong negative divergence with Nifty where Nifty has crossed above its previous pivot level of 5750 whereas Advance decline ratio has been constantly failing to show any improvement. This further conforms to the outlook that the current up move is simply corrective and not start of strong uptrend.
From wave perspective, we think the current up move is wave a of ………….
In short, we continue to expect sideways action between the range of ……….. and 5950 levels over short term before the downside correction starts.
Nifty made a high of 5962 and reversed from there and made a low of 5868 from there which is almost a 95 points fall from the top so far…
To know what is next from here subscribe now to “The Financial Waves” and get insight not only in Nifty but also on Bank Nifty, Midcap indices and stocks that supports our view.
By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com
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