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If Nifty in Expanding Triangle Be Ready for Volatility!

neo wave nifty trading Dec 09, 2020

Nifty has continued to drift higher over past many days. Infact it has been nearly 26 days since Nifty has managed to protect the prior lows on closing basis (excluding outside candles). This is a typical behavior of an Expanding Triangle pattern that creates the much needed euphoria by giving a throw-over above important trendline levels.

To understand the pattern let us look at Nifty movement on an hourly chart which is published in the morning daily research “The Financial Waves short term update”

Nifty 60 minutes chart:

Elliott Wave analysis: Following is an excerpt from the daily morning research

As indicated on the previous day, the ongoing up move post wave x can either be a Diametric or an Expanding Triangle pattern as wave e is the biggest so far. Expanding triangles are most common during very large complex corrections.

As shown on the hourly chart, post x wave formed near 12600 levels, prices are probably in wave e as of now. As per Neo Wave, e wave will usually be the most time consuming and complex segment of the expanding triangle. The most typical construction of e wave would be a Zigzag (in small expanding triangles) or a complex combination of corrections in larger patterns. Also, Neely says, the e-wave will usually almost break beyond the trend line drawn across the top of wave a and wave c. As shown on the chart prices have now broken above the a-c trendline before reversing on the downside. However, only when the price breaks the important support levels on the downside, we will be able to conclude that the pattern is over. Until then, existing buyers can keep riding the trend unless there is a close below the prior day’s low.

Also note that in addition to the above there are also Channels, RSI, Bollinger Bands® applied which further helps to add conviction and provide precise trade setup.

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