Understanding the trend of Bank Nifty with Elliott wave theory, Time Cycles and other technical indicators!
Bank Nifty recently showed break below the channel support. Below is the part of research taken from “The Financial Waves Short Term Update” published in today morning!
Bank Nifty 60 mins chart: (Part of research taken from report dated 4th December 2017)
“In the previous update on Bank Nifty we mentioned that “A significant move below 25600 can result into filling the Gap created on Moody’s rating upgrade day and eventually lower. Pattern is clear and should be complete very soon!” BANG ON!
Bank Nifty behaved exactly as expected and prices turned down sharply. As soon as the support levels were broken we saw sharp decline in banking stocks. There is a possibility that the entire up move in the form of wave c is complete and next leg on downside might have started.
Bank Nifty was moving in wave c of a Flat pattern as shown on daily chart. This wave c formed Ending diagonal pattern as wave iv overlapped with wave i. The reversal of past two trading days had been sharp and fast which has decisively taken out the entire rise in form of wave v of C in just two days of time. This has resulted into faster Price and Time reversal.
As shown on hourly chart, the blue channel support now stands broken and any pullback can be temporary. On upside 25600 which was previous support should now act as major resistance. Existing short positions can now use this as a trailing stop and keep riding the down move. The next support on Bank Nifty is now near the Gap area at 24560.
In short, Bank Nifty behaved precisely as expected despite of optimism. Pull back should be used as shorting opportunities as long as 25600 is protected.”
Happened: Bank Nifty moved lower exactly the way we expected post RBI policy and made a low of 24820 levels. This shows the importance of channels and wave analysis.
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