In my previous post I mentioned about the Diagonal in Nifty. As mentioned Nifty tested 7777, however failed to close above the Resistance. After forming a Doji Satr on Daily and Hanging Man on Weekly Chart Nifty started declining this week. Today it dropped sharply post RBI Policy and formed Bearish Engulfing candlestick pattern; which is an Indication of Reversal.
Currently Supports are at 7588,7553,7486 and 7405. If we assume this Rise as Leading Diagonal in Wave 1; Correction in Wave 2 shall ideally not go beyond 7405. If Bulls manage to protect 7405 Nifty may resume its Up Trend. However, failure to protect 7405 may lead to resumption of the year long Down Trend in Nifty. Bulls must protect 7405 and cross 7760 in next 3-4 weeks, else a sharp decline to 6647-6567 in April/May shall be the End of year long Bear Market.
Currently we don't know whether this Rise is a part of New Bull or just a Bear Market Rally; however we can say the Bear Market is over once Nifty Decisively Breaks the Resistance near 7760. We need to watch price action near 7405 and 7760 very carefully to determine the future movement of Market.
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Thanks & Regards,