Is Nifty headed for a crash below 10000 or one push on upside is pending?
Nifty had a Big Gap down opening and prices sustained the Gap throughout the day. This keeps the short term trend on downside. However, one need to understand that there are 5 state Election outcome which will be due tomorrow. Any positive surprises might result into a sharp reversal. During such scenario one needs to stay cautious and leverage less.
Now look at the below chart of Nifty which was published in “The Financial waves monthly update” on 9th November 2018. Look at the path shown on the chart:
Nifty daily chart– Anticipated on 9th November 2018
Figure 4: Happened
In the previous monthly update we mentioned that “We are yet to see the right shoulder formation with neckline near 10000 mark. It is based on Time cycles and Neo wave assumption that we will see a right shoulder now under formation which will take prices towards 11000 mark or a little higher to create the necessary euphoria again. Trust me the last 600 points of up move on index did not produce much optimism but the next 200 or 300 points will result into widespread belief that the low is in place and up move is starting. This is the typical nature of market and traders who only trade based on gut feeling will be trapped on the long side near 11000 mark” BANG ON!
Nifty had moved precisely as expected in the month of November. We have been pretty accurate for identifying the up move and the widespread euphoria in the markets. Nifty moved higher towards the level of 10940 before reversing back on downside. When we are capturing a move of nearly 1000 points on Nifty from the lows one should not try to catch the last final breath and be prepared when it approaches the target levels.
Neo wave pattern: We completed wave (a) that truncated near the levels of 10440 and post that we are seeing wave (b) formation. The pattern currently ongoing within wave (b) is not clear and next few days of price action will clarify this. A faster retracement below …..…. followed by ……….. from where wave c of (b) started will suggest that a top near 10940 is in place and the downtrend is resuming whereas if we start seeing some halt here over next few days then there will be a possibility of retest of …….. This will suggest that wave (b) is either forming a ……….. triangle pattern or a …………… pattern. As we saw expansion in the first few legs there is possibility of contraction pattern over next few days or couple of weeks. However, volatility will be higher within the range and so one should trade with caution unless wave (b) completion is confirmed. Small trades can be taken during this scenario and once the bigger degree downtrend begins start following the trailing stop method to ride the fall.
In a nutshell, …. this is not necessary and it is best to look for shorting opportunity as we approach near the resistance levels. However, next few days of price action is very crucial. In case of sharp decline below ……. the bigger degree correction will resume below 10,000. One should be prepared for increase in volatility with state election outcome due over next few days as markets are already in corrective phase which is normally associated with high volatility.
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