The below research is published in "The Financial Waves Short term update" by Waves Strategy Advisors. This reserach report has Nifty along with 3 different stocks and Elliott wave counts. For subscription options visit http://wavesstrategy.com/index.php/store.html
Bottom Line: Nifty continued to move higher
and tested previous important top but so far it has been on slower momentum!
Nifty daily
chart:
Nifty 60 mins
chart:
Wave Analysis:
In previous
update we mentioned that, “…In short, on upside high made near 6250
followed by 6300 will be extremely important on closing basis. A strong close
above 6300 will force us to adopt alternative bullish possibility and a
probable upside breakout from the consolidation of 6 years correction.”
We have been
bullish on Nifty all the way from 5800 to 6200 and we have also mentioned about
the importance of the current trading zone which it has touched many times
before as well. A decisive breakout above the previous highs will indicate
start of next trend on upside. But we have changed our short term stand to
negative few days back based on the fact that the up move has been associated
with slower and slower momentum. Also prices broke the important channel
support by moving below 6120 thereby indicating that the short term up move is
lacking conviction and would rather fail one more time before managing to make
new highs.
Volumes have
also gone down from the peak value which was last seen in August with upside
volumes spikes were registered on 19th and 20th September
and since then it has been constantly reducing. We should have strong volumes
at current levels to indicate accumulation even at higher levels for Nifty to
make new highs.
Daily RSI has
failed to move above 70 so far. It is again close to this range but has
exhibited negative divergence. A turn down in prices from here will create one
more negative divergence on daily scale. On shorter time frame, a closer look
reveals that each of the important highs at 5920, 6140, 6156, 6252 and 6269 has
been made with RSI reading of 84.50, 80.20, 75, 62.50, 66. This clearly shows
that momentum indicators are not supporting the up move. This is visible on
above 60 mins chart.
Such movement
and waning out of momentum was last seen during the uptrend of January 2013
when markets made a peak of 6114 and then reversed for next 2 to 3 months.
From wave
perspective, since no part of wave C except in wedge pattern can break the 0-B
trendline we have redrawn this trendline to accommodate for the spike down seen
2 days back. Also actual wave “a” started from 5320 and not 5118 so the actual
0-b trendline is shown above which is still intact as of now.
If the current
move has been a 3rd wave up and not c then we should not have so
many technical reasons mentioned above against the 3rd wave and
momentum should pick up in 3rd waves which is actually slowing down
and is a typical property of wave c.
On one lower
degree we have tweaked short term counts to accommodate possible extension seen
in wave c. At the high of 6270, wave v= wave i and also entire wave c is
exactly equal to wave a.
Given all
these technical factors, we have to wait for prices to close below the previous
day’s low for minor negative confirmation and a move below Tuesday’s low of
6079 will be extremely crucial. Markets normally do not move up with so much of
negative indication but nevertheless these indicators will start turning on
upside and remove negative divergences if Nifty closes above 6300 where we will
be forced to adopt bullish alternatives which looks lower probable as of now.
In short, the
uptrend looks on lack of strength and momentum so far and 6300 will be
extremely important level. Move below 6210 followed by break of 6080 is
required for start of negative trend atleast towards 5800.
The above research was published in today's morning report by Waves Strategy Advisors. For subscription option visit http://wavesstrategy.com/index.php/store.html or write to helpdesk@wavesstrategy.com or call us at +91 9920422202 / +91 22 28831358
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