Nifty forming topping pattern! Fibonacci levels!

The below research is published by Waves Strategy Advisors on 20th January 2014 morning. For daily research report "The Financial Waves short term update" on Nifty and Equity stocks visit http://wavesstrategy.com/index.php/store.html

Bottom Line: Nifty looks vulnerable. Close below 6230 followed by 6190 will indicate the uptrend from 5118 is probably complete!

Nifty daily chart:

  

            Nifty 60 mins chart:

data as on 20th January 2014 morning

Wave Analysis:

In previous update we mentioned that, “So far prices are still where it opened the month and there is no net progress. Unless and until we see a strong breakout above 6450 with momentum across the sectors our view will be of topping process as ongoing. In short, move above yesterday’s high of 6345 will continue the uptrend as long as 6260 followed by 6230 is intact on downside but the medium term outlook remains as topping for now.”

Nifty had a weak opening on Friday and prices traded in red zone throughout the day. The selling pressure intensified in 2^nd half and Nifty momentarily broke below the immediate support of 6260 but managed to close above it. The low made by index was at 6245 which is above an important support of 6230 levels. Close below 6230 will be first sign of negative confirmation that the short term uptrend is in danger.

Move up from 6140 to recent high of 6345 took 4 days exactly like x wave (shown on daily chart) anticipated earlier. Friday was 1^st day of down move and a complete retracement below 6140 over next 3 days will be a strong negative confirmation that an important top is in place. We will get the downside forecast for the next intermediate trend once a confirmation for top is in. Move below 6140 will strongly indicate that move from 5118 to 6345 has ended and the trend will remain negative atleast for few weeks if not months. However, as of now looking at the shorter degree chart there seems to be a possibility of one minor push back towards 6320 levels and prices can fail near that. If it however manages to break above it then 6380 can be the strong hurdle zone.

Over short term, as shown on 60 mins chart, the time cycles have been working very precisely. This time as well the top is made a day later similar to previous top which was made a day later shown by this cycle. The idle path is as shown on the chart but the uptrend can be in danger if 6230 is broken sharply in impulsive fashion. As long as that is intact one attempt towards 6320 or 6380 cannot be ruled out.

In short, as prices have so far managed to protect the important pivot support of 6230 we continue to look at the scenario as topping and one minor attempt on upside is plausible. Close below 6230 followed by 6140 will confirm start of a bigger degree downtrend.

For subscription to daily research report "The Financial Waves short term update" on Nifty and Equity stocks visit http://wavesstrategy.com/index.php/store.html