Nifty PSU Bank

Nifty PSU Bank Analysis.  As on 7 Nov 2020, Saturday. CMP 1374.

Bottom line : Neutral.

Short term bullish.. possibly.  But Intermediate term neutral.

A low could be in place, but it is not confirmed.  Further evidence is required.

Before turning bullish, we would be cautious for the following reasons :

  • On the 3 day or weekly chart (not shown), there is no evidence of a 5 wave up.
  • Unless price has formed a truncated 5th, further new lows are still possible.
  • On the daily chart (shown), Ichimoku still shows price below the cloud.

--

Primary count : In the short term, price could rally above 1661 in either wave 3 or wave C.  It is ok for a trader to be bullish (as long as a stop loss is maintained), but to be conclusively bullish from an investor point of view is premature.  If price is in a 3rd wave up, then it is preferable for the gap up from 1336 to not be tested.

This also assumes the rally from 1078 to 1573 is a 5 wave pattern.

--

Alternate count (bearish) : The decline from 1661 to 1233 is in 3 waves, leaving open the door for an ending diagonal, meaning further lows. Or it could be some larger bearish triangle in play, if the rally from 1078 to 1661 is interpreted as 3 waves instead of 5.

--

Ichimoku : Price is below the cloud, and has tested the underside of the cloud from below.  If price has indeed reversed trend, then the gap up from 1336 should not be filled, and price should continue up strongly from current levels and penetrate the cloud easily, leaving the gap as a break-away gap.