Bottom Line: Nifty failed to close above 8900 or
below 8800 and continued to move in a range. Break of either levels awaited for
clear trend to emerge!
The below research was published today morning before equity markets opened in "The Financial Waves short term update" by Waves Strategy Advisors
Nifty daily
chart:
Nifty 60 mins chart:
Elliott Wave Analysis:
Nifty
had a range bound movement in previous week with prices touching the high of
8913 and low of 8793. There is a weekly Doji bar formation and a break of the
range is important for clear direction ahead. Within this range IT stocks showed
some outperformance and Bank Nifty failed to show any strong bounce back. Nifty
has retraced around 80% of the previous down move whereas on other hand Bank
Nifty which was leading the rally retraced only 50% of the entire down move.
Also the bounce back in Bank Nifty is in overlapping formation so far which is
not a good sign from medium term perspective. From weekly perspective, decisive
break above 8913 will resume the positive trend whereas close below 8790 can
result into short term downside reversal.
The
recent up move which started in form of wave (c) of e from 8600 levels has so
far taken 6 trading days. So a faster move back below 8600 in less than 6 days
will indicate medium term reversal to downside. This will break the pivot level
in lesser amount of time the up move took to form. Short term moving average of
20 days is also acting as an important proxy for trend. The support as per this
average is also near 8600 levels.
The
movement of past few days has been exactly within the Bollinger Bands as shown
on hourly chart. Prices have been moving sharply within the range but only to
take support near the lower and upper areas of the Bollinger Bands. When on Thursday
there was a strong move towards 8913 we expected a break on upside. However,
prices reversed the very next day back towards 8800 support area. So now it is
prudent to wait for an hourly close
above 8913 or below 8790 for confirmation of the break of the band and start of
the trend in that direction.
Range
bound action has kept both Flat pattern and Triangle pattern possibility open.
As mentioned above a faster reversal below 8600 will confirm truncation of wave
(c) of e at the highs whereas on other side slower movement from here will
indicate wave (d) of e is forming within a triangle pattern.
In
short, Nifty is currently moving in a range but a clear trend should emerge on
break of mentioned levels in this week. Leading sectors have failed to show any
upside momentum which is a cautious sign and close below 8790 will result into
short term downside reversal. Volatility can be high in current week ahead of
Budget!
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