Yesterday's Nifty moves had some distinctive features:
1. While a bounce up from 20DMA was expected,this bounce was supposed to be a retracement of 5729-5637 i.e. a 3 wave form which normally does not retrace more than 80%( though theoretically 99.9% retracement can be done).
By testing 5720, not only 5729-5637(=92) has been retraced 90% but also this upmove(5637-5720) was not a 3 wave retracement(corrective) form. And going strictly by the form of this upmove, it was an Impulse.
There have been instances--primarily because of algo form of trading-- when the retracements have not taken 3wave forms,but theoretically a retracement has to be a 3 wave form.
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2. The close on Daily charts was above 5DMA(5698) which in itself suggests that the downmove may not go deeper in its current phase.
3.Yesterday's green candle has made a bullish engulfing pattern which further points to Nifty moving up from here onwards.
4. However, on daily charts, 5/10 DMA bearish cross-over has taken place---which points to increasing momentum on the downside and going by this yardstick one cannot say that the downmove has fizzled out.
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In such a scenario, 5729 assumes importance to me. So far the downmove has been seen as
5815-5666=149
5666-5729=63
5729-5637=92
If 5729 gets breached on the upside then this downmove 5815-5637 would be labelled a 3 wave abc and it would mean a complex wave developing which may take us to 5815+ levels(though not in a straight line);
but if 5729 remains unbreached then the labelling would be:
(i)=5815-5666
(ii)=5666-5729
(iii)=5729--downwards in progress as a 5w form
5729-5637=92
5637-5720=83
5720 downwards by 1.62x92=150 means 5570 in a straight line.
On the news front, Infy results will be out in pre-market hours and that may very well decide/define market course for today.
And that way technicals will follow the news ---- at least today.
1. While a bounce up from 20DMA was expected,this bounce was supposed to be a retracement of 5729-5637 i.e. a 3 wave form which normally does not retrace more than 80%( though theoretically 99.9% retracement can be done).
By testing 5720, not only 5729-5637(=92) has been retraced 90% but also this upmove(5637-5720) was not a 3 wave retracement(corrective) form. And going strictly by the form of this upmove, it was an Impulse.
There have been instances--primarily because of algo form of trading-- when the retracements have not taken 3wave forms,but theoretically a retracement has to be a 3 wave form.
.png)
3.Yesterday's green candle has made a bullish engulfing pattern which further points to Nifty moving up from here onwards.
4. However, on daily charts, 5/10 DMA bearish cross-over has taken place---which points to increasing momentum on the downside and going by this yardstick one cannot say that the downmove has fizzled out.
.png)
In such a scenario, 5729 assumes importance to me. So far the downmove has been seen as
5815-5666=149
5666-5729=63
5729-5637=92
If 5729 gets breached on the upside then this downmove 5815-5637 would be labelled a 3 wave abc and it would mean a complex wave developing which may take us to 5815+ levels(though not in a straight line);
but if 5729 remains unbreached then the labelling would be:
(i)=5815-5666
(ii)=5666-5729
(iii)=5729--downwards in progress as a 5w form
5729-5637=92
5637-5720=83
5720 downwards by 1.62x92=150 means 5570 in a straight line.
On the news front, Infy results will be out in pre-market hours and that may very well decide/define market course for today.
And that way technicals will follow the news ---- at least today.
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