Elliott wave and Neo wave is GPS of the market that helps to forecast the probable path prices can move.
KST indicator helps to understand the momentum.
Open interest profiles shows the area where big players are creating their positions.
Nifty hourly chart:
Elliott wave analysis – Nifty hourly chart shows the entire rise post completion of wave x at the lows of 21200 in the form of 7 legged corrective pattern. This is not an impulse rise as it does not follow the basic impulse rules. The entire rise is in Diametric pattern. Neo wave defines this pattern as corrective that consists of 7 legs and labelled as a-b-c-d-e-f-g. Post completing wave x looks like the entire rise is complete in the form of Diametric pattern and we can start seeing pressure on prices. However, along with forecast it is important to get 2 stage confirmation as per Neo wave as well.
2 stage confirmation technique – this is a powerful method that confirms if the top is formed and we have started seeing the reversal. In diametric pattern, we need to see faster retracement below the d-f trendline and 2nd stage is obtained when the entire wave g is retraced faster. This will happen below 21800 levels. But for traders one has to pre-empt by looking at smaller time frame patterns to enter much early with good risk reward.
Now, breach below 22350 will form classic lower high lower low formation as per Dow theory and will indicate an early sign for wave g to be over for much lower levels to come.
This will remain valid unless we see move back above 22800 levels that formed double top formation as well.
KST indicator – This indicator shows slower momentum as there is negative divergence between prices and indicator. Also the KST line has moved below 0 suggesting a possible momentum can pick on downside if support levels break.
In a nutshell, Neo wave is suggesting Nifty is in matured stages of up move. We were able to capture the entire up move and now we are warning for impending top to form for few days or weeks and lower levels can be expected once the support near 22350 is broken as long as 22800 holds on upside.
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