Nifty Neo Wave Pattern, Is it Forming a Triangle? Breakout Levels!
Feb 13, 2023
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Trading Nifty or any stock requires clear understanding about technical analysis methods. Elliott wave and Neo wave gives direction and maturity of the trend.
Nifty has been moving in downward sloping corrective channel and has not shown any strong directional move since Budget on 1st February 2023.
Nifty hourly chart:
Elliott wave analysis – As shown in above chart, prices are moving in complex corrective pattern that involves x waves. An “x” wave connects two standard corrections together. Neo wave is advanced part of Elliott wave that has more rules and newer patterns like Diametric. It gives more objective understanding about the direction and maturity of the trend.
As shown in above chart, prices formed Diametric pattern in 1st standard correction and it was followed by wave x. Post that we are possibly in a triangle or a Diametric pattern. A triangle is a 5 legged pattern with contracting behaviour without any meaningful trend whereas Diametric is a 7 legged corrective pattern.
As of now we can be in wave e. If it is a triangle pattern then we should not break below the low of wave c which is near 17490. For upside breakout prices have to show faster retracement above the last falling segment. In this case it is wave d which completed near 17920 levels. So, a faster retracement above this level will confirm start of a bigger up move. Until then sideways action can continue and so it is prudent to sell options in current context of the market.
In a nutshell, by identifying the probable pattern under formation as per Elliott wave / Neo wave one can form prudent option trading strategy along with identification of key support and resistance levels. So, 17920 is crucial level for positive breakout and 17490 is important support as per Neo wave logics.
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