The below research was published today morning before equity markets opened. For subscription to "The Financial Waves short term update" report on daily basis visit http://www.wavesstrategy.com/index.php/store.html
Bottom Line: Nifty had a strong Gap up
opening supported by ITC but prices gave away entire gain in same hour and
filled the Gap.
Nifty daily
chart:
Nifty 60 mins
chart:
Wave Analysis:
In previous update we mentioned that “In
short, the trend for Nifty is going to be sideways and move above 8560 is
important for positive trend to resume. Only a close below 8430 will indicate
weakness and deeper retracement. The size of bar in either direction will be
important to observe!”
Nifty had a very interesting movement yesterday. Prices had a Gap up
opening and immediately made a high of 8627 in the form of a spike and reversed
sharply in the same hour touching a low of 8526 which is exact 100 points from
the top. Spikes at times provide very crucial support and resistance levels.
The high made at 8627 is now going to act as very crucial upside resistance and
unless we see a close above this level the short term trend will remain
sideways. FMCG sector was top gainer followed by Banking sector that managed to
retest the morning highs.
As shown on hourly chart, there is a possibility that the wave (v) we
have been expecting on upside might have completed at yesterday’s high itself.
However, prices have so far not breached the support on downside. Normally such
sharp movement is also termed as key reversal
day if the follow-up action confirms it. It is better
to wait for negative confirmation atleast below 8500 to confirm this key
reversal bar. Normally it should be associated with high volumes which were not
seen yesterday. Nevertheless, a close below 8500 followed by 8430 will confirm
that an important top is formed. For now it is prudent to wait for break of
levels either below 8627 or 8500.
Alternate possibility: The reason for showing alternate possibility is that wave v of c has now
consumed lot of time compared to previous impulse up moves. So there is a
possibility that the entire up move is in the form of double corrective pattern
from the lows of 7730 and now prices are in second correction which is forming
a rare expanding triangle pattern. A move above 8627 with increase momentum
will raise the odds that these alternate counts are under play and higher
levels can be seen towards the upper blue channel line.
In short, yesterday was an important movement from technical perspective.
We have to wait either 8500 to break for negativity or 8627 to break for
resumption of uptrend. Such range bound movement can continue to be frustrating
but as highlighted earlier prices cannot continue in trendless manner for very
long. A trend has to emerge soon!
Subscribe now for the daily research report "The Financial Waves short term update" and see yourself why Indian markets are at very crucial juncture. The daily morning research will give insight in stocks and other indices as well. For subscription options visit http://www.wavesstrategy.com/index.php/store.html
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