- Last week’s action formed a hanging man like candle which is a premature sign of bearish reversal, the reversal could get validated on a fall below 9860 levels and also price has to sustain an hour below the levels.
- In line with our expectations, index is spending time at the higher levels; so far it has spent 8 days at the higher levels or it is trading above 9783 for last 8 days. It may spend another 3-4 days at higher levels or price have to move above 10002 before the next significant correction. However we are in countertrend bounce, so maintain stoploss of 9783 for all open longs positions. [Internal “wave a” has taken 17 days so “wave b” could spend enough time at higher levels, probably it could spend some 11 to 12 days - so far it has spent 3 days and wave b needs to spend more time. Make note Index is in counter trend upward retracement move; so maintain longs with stoploss of 9783 levels. Overall the expected upward move attained the target and it may spend some more time at higher levels before the next fall towards 9280 levels.]
- Index is moving within a very narrow range and whole week’s price momentum is within the Monday’s price range i.e. 9988 to 9861 levels.
- Internal “wave b” is spending time at the higher levels or above 9783 which is the beginning of “wave b” so the expected time wise movement is happening in “wave b”. Make note “wave a” has taken 17 days so “wave b” have to spend 50/60% time of “wave a”; so far it has spent 8 days.
- Index is moving in a contracting manner even after the breakout of contracting triangle, post breakout index moved up quite sharply for three days then it has started move sideways.
- We have been mentioning that we need negative intermarket divergence for top reversal; in line with our expectation BSE Mid Cap index have been continuously forming new life highs, current high placed at 15906 (Previous Highs are 15642 on Aug 08, 2017 and 15708 on Sep 01, 2017). The intermarket divergence between Nifty and BSE Mid Cap index exists which is a bearish reversal sign and negative placement. To maintain this negative intermarket divergence Nifty has to stay below previous high of 10137 levels.
- Overall maintain mildly positive bias with the stoploss of 9783 for the counter trend upside target of 10002. Turn negative once index moves above 10002 with thestoploss of 10110; If index turns down from higher levels then it could slide down to 9280 and lower. Remember index is in progress of larger downward retracement leg of the last major rising leg started from 7893 to 10137 and the downside targets are remains at 9280 – 9015.
- As per our preferred wave count: Cycle degree “wave i” has started from 4531 level and ended at 6229. The “wave ii” has started from 6229 and ended at 5118. The dynamic “wave iii” has started from 5118 and ended at 9119 with a couple of extensions. The larger fall from 9119 to 6825 was cycle degree “wave iv” down. Now we are in cycle degree “wave v” which has tested our medium term target of 10000 Mark (We have been mentioning this target from Feb 04, 2017). The rise from 6825 to 8968 has five wave advance marked as major “wave i/a”, its internals can labeled as a/1-b/2-c/c-d/4-e/5. The fall from 8968 to 7893 was double combination marked as major “wave ii/b”, its internals a-b-c-x-a-b-c. The current rise from 7893 to current level is marked as major “wave iii/c” which has ended and “wave iv/d” down in progress towards 9280 - 9015. The last rise i.e. “wave v/e” can move above top of “wave iii/c” (10137) or it can fail also so we are not highlighting the last rise. Overall the cycle degree “wave v” not ended and it has two more uncompleted legs.
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