Nifty scenario analysis – Applying Bollinger Bands®, Moving averages, Wave theory!

Nifty has been moving violently between important levels but has managed to protect the support and resistance all the while.

Nifty had a positive start yesterday and prices touched intraday high of 10279 levels. However, post 1 pm the selling pressure started building up and there was a sharp fall towards 10110 levels. This was a fall of nearly 170 points from the highs in short span of time. The fall was across the board with high beta indices also losing more than 1%. The selling emerged after the announcement of China imposing additional tariff on U.S. products worth 50 bln USD. The short term news events are resulting into random and volatile movement but prices are still trading within a range on net basis.

Nifty 60 mins chart: Preferred counts

The below research is picked up from daily equity report – The Financial Waves short term update

Following is the Nifty scenario analysis:

Scenario 1 – This is our preferred scenario as the majority of stocks are still lying near the support areas and the stocks like SBI, Tata Motors, BHEL that were leading the fall had shown faster retracement above the last falling segment. So there is possibility that Nifty has not completed wave g but it is in its final stages and move back above the high of 10280 will confirm this.

As shown on hourly chart, Nifty is back towards its Bollinger bands support and it failed to close above the same during the day. Also the reversal came from red channel resistance. This increase the odds that wave g is forming an Extracting triangle pattern and post its completion we will see a positive breakout. We will stay with this as preferred scenario as long as strong momentum with break of 10000 is not seen from here.

Scenario 2 – (shown in actual research report) ……….

So for now it is best to wait for a clear trend to emerge as prices are whipsawing around crucial areas thereby creating a challenging trading environment. Now a decisive move back above ……… will result into a positive breakout. Yesterday’s close is back towards the Bollinger bands support area which is at 10120 zone. Let us see if there is a positive attempt in today’s session thereby resulting into no net progress but high volatile movement.

In short, Nifty can continue to trade within ……….. levels. Buying near supports and selling near resistance is going to be the best strategy for now unless a decisive breakout in either direction is seen. We will stay with scenario 1 as preferred count for now and only a break below …….. will force us to adopt scenario 2…

To know what is the scenario 2 in case prices reverse again and what are the positive targets from here on get access now to “The Financial Waves short term update” We turned bullish near 9950 amidst all the pessimism and Nifty is already at 10280 levels. So what is next from here? Subscribe NOW annually and get 3 months of Monthly research report along with it. Visit here