Hi Friends,
While everyone is eying on the FOMC Meet on Wed 18 Mar 2014. Lets look at development on Charts. Nifty tested 6575 and closed near 6515 giving a Shooting Star Formation with Negative Divergence on RSI. Which could be the sing of short term Trend Reversal.
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| NIFTY |
As mentioned in my previous post currently there are two alternatives open.
1) The rise from 5933 looks Impulsive and could be part of 3rd wave if
we consider the move from 5118-6415 as Leading Diagonal. That means
Nifty completed the contracting triangle after 6 years consolidation and
we are starting a New Bull Market which could take Nifty to uncharted
territory. In case of Wave Equality the 3rd wave might take Nifty
towards 7300. However, we need a confirmation by break above the weekly
channel resistance near 6650.
2) Another alternative of this rise being a part of the corrective wave
from 4531 over last 2 years as I have been always mentioning in all my
previous posts. In this case Nifty shall respect the weekly channel
resistance near 6650 and start declining towards the lower end of
channel near 5700. And below 5700 downside is wide open.
Currently Index is overbought and some correction looks on cards. Once below 6490 pullback to 6430-6360 might be on cards. After which Rally may resume in case of New Bull Market. However, fast fall below 6212 will invite a huge downside to 5700 and much lower.
As mentioned in previous post Pharma & IT stocks have already started correcting. In case of downside in Index Auto, Pharma & IT stocks are expected to crack heavily along with Capital Goods and Banking stocks.
As per the study of wave personality and guidelines I still doubt the
start of New Bull. Also Triangles are typically found in 4th wave of an
Impulse and wave 2 are often zigzag or combinations. However, one
should not be biased in order to take right trades. So I would suggest
to go with the flow.
Thanks and Regards,
Harsh Dixit.
Hi Friends,
In my previous post I mentioned that break below 5930 would be indication of a downside. However, Nifty didn't break 5930 and gave a Fast & Furious Rally to 6537. But is this Rally a Bulls Rally or a Fools Rally? We will need to have a re-look on short term and long term counts of Nifty.
The rise from 5985 looks Impulsive and could be part of 3rd wave if we consider the move from 5118-6415 as Leading Diagonal. That means Nifty completed the contracting triangle after 6 years consolidation and we are starting a New Bull Market which could take Nifty to uncharted territory. In case of wave Equality the 3rd wave might take Nifty towards 7300. However, we need a confirmation by break above the weekly channel resistance near 6600.
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| NIFTY Weekly |
Another alternative of this rise being a part of the corrective wave from 4531 over last 2 years as I have been always mentioning in all my previous posts. In this case Nifty shall respect the weekly channel resistance near 6600 and start declining towards the lower end of channel near 5700. As the week starting from 10th March 2014 stands at important weekly cycle from the low of 4531.
Lets have a look at what happened in previous week. After testing low of 6212 on Monday Nifty rose sharply towards 6537 which looks to be the 5th wave extension within current wave from 5985 which still might be running. On Friday Nifty marked all Time High and gained 125 points which looks more of a Euphoric Rise. As on a day of Index touching Life Highs the 125 points Rally was driven by few selective stocks which gained 5% to 8%. However, the outperforming sectors like I.T. and Pharma were down 3%. Mid and Small Caps closed in Red which might be due to profit booking. VIX shot up crazily after testing multiple support zone.
Currently there is too much noise in Market and the Rally is Driven by Hope of possible Government change post 2014 Elections. Considering the noise and Bulls Hopium and the increased Volatility in Market the Rally may not be the case of strong Bull Trend. But we never know what the case may be. For short term the index is overbought and some correction is expected towards 6400 post which Rally may continue. However, weather this is the start of New Bull or just a Fools Rally will be decided in Next two weeks.
In case of New Bulls Nifty shall break the weekly channel resistance and head towards 7200.. However, a break below 0-2 line near 6200 would be indication of weakness. In that case we may look for downside to 5700..
If Nifty breaks the weekly channel resistance one should look for stock specific trades which could fetch 20-30% rise in short term. In case of downside Auto, I.T. & Pharma might crack heavily along with Capital Goods and Banking stocks.
As per the study of wave personality and guidelines I still doubt the start of New Bull. Also Triangles are typically found in 4th wave of an Impulse and wave 2 are often zigzag or combinations. However, one should not be biased in order to take right trades. So I would suggest to go with the flow.
Thanks and Regards,
Harsh Dixit.
