Nifty struggling again near previous important highs!

The below view was published in morning daily research report "The Financial Waves Short term Update" by Waves Strategy Advisors. For different subscription  options and details visit http://wavesstrategy.com/index.php/store.html or http://wavesstrategy.com/

Nifty formed an outside bar near the previous high of 6150 and filled the Gap up opening. Next 2 days is very crucial to determine if short term top is in place!

                                

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that, “In short, the trend continues to be positive with 6030 as an important support level for short term. Move above 6150 which is the previous high is important and it will also break another resistance level on upside.”

Nifty had a Gap up opening exactly near the previous high it made in mid-September at 6145 levels but failed to sustain there and closed on negative note. It seems that everytime market reaches this level it gets nervous. Even this time prices are showing reversal signs over short term exactly near the previous high. Next 2 days of price action is extremely crucial to determine if the short term trend is reversing to downside.

As shown on the daily chart, prices broke above the black resistance line but closed below it. The overall breadth also turned negative with Midcap and Smallcap index moving down by more than a percent. From wave perspective the current up move is marked as wave c of wave (B). Wave (B) is forming a zigzag pattern. As per this pattern wave b should not retrace more than 61.8% of wave a and wave c should atleast cross above end of wave a. Both of these criteria are now satisfied and there can be a possibility of reversal. However, looking at the lower degree chart there is a possibility that one minor push on upside is still pending. The deciding factor will be 6040 level on downside. A move below this level will be first indication that an important top might be in place whereas if prices again manage to cross above 6150 then the current leg will extend further on upside.

On larger time frame, 6200 is a very important level on upside. A move above this level with increase in overall momentum, breadth and broader participation is required for confirming if the larger trend on upside is beginning. Failure to do that we will keep the above shown counts as preferred.

In short, Indian markets have now arrived at very crucial juncture. A move above Tuesday’s high is necessary for uptrend to resume whereas any move back below 6040 will be first sign of weakness. Volumes have been above average on Tuesday and let us see how it behaves over next few days along with price movement. Existing long positions continue to use 6040 as crucial stop level on downside.

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