The correction in Nifty that stared at the high of 9120 seems to
have completed its first leg at 7940. The wave pattern of this down move
looks like a leading diagonal (chart 1). Also this has a probable
impulsive wave count (chart 2). If this is so, then any rally upwards
may only be a retracement and the nifty may continue lower after it has
retraced the move from 9120 to 7940.
chart 1
chart 2
Likely targets
The way the Nifty has moved in last 3-4 months has created a
possibility of a very bearish out look. So the current move up should be
carefully followed. One may go long here, but if the move up happens as
an A-B-C corrective pattern, then these positions should be closed. The
likely targets to watch out for are
38.2% retracement – around 8390
50% retracement – around 8530
61.8% retracement – around 8665
Alternate possibility
There is an alternate bullish count. As per this count Nifty has just
completed wave 4 of the 5 wave structure started in December 2011. If
so Nifty is likely to make a new all time high before starting a
significant correction either price wise or time wise.
Conclusion
In either case Nifty is likely to start a significant correction upon
the completion of the current up move started at 7940. It may or may
not make a new all time high. It would be good idea to start booking
profit/ stop any new purchase at the first hint that the rally is
complete.
No comments:
Post a Comment