Nifty showed sharp selloff falling below 26000 and closing lower by 368 points. Selling was witnessed majorly in index heavy weights like Reliance and banking stocks.
Understanding the overall pattern on basis of advanced Elliott wave – Neo wave method.
Nifty daily chart:
Nifty hourly chart:
Nifty daily chart shows that prices closed below prior day’s low after 14 consecutive days. This has turned the overall bias on downside but the medium term tone still remains buy on dips.
As shown on hourly chart since the low the entire rise looks to be in complex corrective fashion. The rise from low of wave f we are dividing it into wave g completion near 25450 and then fall in form of wave x to make wave g equality in terms of price / time to that of wave a.
The internal counts post wave x shows completion of rise in minor degree diametric pattern and the fall is only retracing a portion of the rise. This wave down can be wave b post completion of wave a at the high.
So the overall tone is still bullish & post short term wave b completion we can expect wave c to resume higher. The support of 38.2% is near 25740 and 61.8% is near 25410 levels. Any breach back above 25980 – 26020 will indicate possible completion of wave b and start of wave c higher.
In a nutshell, Nifty can move in a broad range as of now of 25740 – 26020, break below 25740 might extend the fall further to 25410 levels. Post completion of wave b we can expect uptrend to start. Basis of this GPS of the market one can form prudent options strategy.
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