Nifty corrected as anticipated! Nifty path ahead...

Nifty Daily chart:

Nifty 10 mins:

Nifty daily chart shows that we are moving in a complex correction of W-X-Y. We have completed W-X- a of Y. We have either completed b of Y either at the high of 5750 or we still are in wave b of Y.

Nifty 10 mins chart shows minute degree wave counts. It is very difficult to explain the nesting of wave counts and it can be very confusing. On 10 mins chart, blue line shows one possibility whereas red line shows the other possibility. A break of 5541 is deciding factor to confirm which possibility is developing. Friday’s consolidation completes Time correction but we might be moving in an expanding triangle rare pattern and one leg e to the upside (shown in red) is pending which might take us near 5682 from where the leg (c) down shall start.

To avoid the complexity and confusion of wave counts, in short we wait for negative confirmation below 5541. As long as 5541 is not taken out on downside we might see a rally till 5682 which shall act as a strong resistance level!

Failure to respect the key support and resistance levels indicate only one pattern that was or is in progress – TRIANGLE!

Nifty Daily Line chart:

Nifty broke below the key support level of 5335 and moved down impulsively till 5200. This was strong indication that markets have much bigger down leg pending. But Friday’s rally proved that to be a “False breakout” and market moved up strongly taking everyone by surprise. Firstly there were fresh long positions built – up and seeing sustaining rally bears started to panic which led to short covering and Nifty moved up steeply and closed the day with a big white candle gaining 150 points which is more than 2% move up.
The only pattern which justifies these kinds of erratic movements and no respect for key support and resistance levels is “TRIANGLE”. Triangles are very tricky patterns and consist of 5 legs all of which are corrective and 3 wave structures. We can see that all the legs up and down have been in 3 waves and net directional movement is just consolidation.
Markets have not done much since the correction started in November 2010 but everytime built false hopes in either of the directions trapping both bulls and bears. It has now become a norm for Indian markets to break the key levels but have no respect for that level and just take a “V” turn later. These types of movements are both emotionally and financially draining and worse for trend followers. It looks like market has been rewarding oscillator traders and break of any key levels should indicate opposite stand.
We now expect 5600 level which has been such a strong resistance zone to be broken and prices might rally till 5650 – 5700 thereby creating false hopes and trapping people on upside above 5600 and will turn lower trapping the bulls that are entering at higher levels above 5600, it being very strong resistance. However given the current structure of market which is way too dynamic to predict and non-trending moves over medium term we would be very cautious and would not make firm statement on where we are headed in few weeks’ time.
Over short term, it will be very crucial to observe how markets open today and if Friday’s high is taken out on the opening session near 5478 and if market can sustain there. Sideways action or follow-up rally will be positive for further direction and any drift lower again will be wait and watch scenario…

Nifty in minor corrective mode!

Nifty Daily:

Nifty 10 mins

Nifty made a high of 5604.75 and turned lower to close the week at 5525. We have been talking about resistance level of 5605 for more than 2 weeks now and we can see the power of this level. Nifty is showing sincere respect for this level and failed to move above it. After touching that level prices immediately turned and started moving down impulsively. We are now correcting in the form of an irregular flat correction as shown and are now in wave C of this flat correction. We do not see this minor downward pull back over as yet and expect atleast consolidation of drift lower now atleast till 5490 – 5500 levels. Prices should retrace till 38.2% of the move up from 5330 as shown. Also time wise we expect atleast one more day of correction pending before we can turn up again.

Any move up above 5605 in lesser time then it took for the move down from 5604, will indicate the previous uptrend has resumed but till that happens we should wait for current minor correction to get over and use any pull back as buying opportunity.

Nifty rallied out of Diagonal pattern as mentioned before!

Nifty Daily

Nifty 120 mins

Nifty 10 mins

We mentioned earlier that, “Nifty can rally steeply from here (Current 5400) and move atleast till 5500 over short term. Today's low should be maintained and we will eventually touch 5600!” This is exactly what happened and Nifty rallied steeply making a high of 5486.

As seen above the rally looks incomplete and we should continue the uptrend for sometime. Next resistance level above 5500 is 5600 and it is important to observe how prices behave from that resistance zone.