Nifty Update. As on Wed June 1 2022. CMP 16,620. Posted at 11 am.
Bottom line : Bullish short term.
Island Reversal Pattern : Gap down, then 16 trading sessions of sideways to lower price action, before a gap up to a similar level from where there was a gap down. Essentially there is overlap of the gap up and gap down. This makes the 16 sessions an island reversal. This is a strong bullish signal, and the preference is for the recent gap from 16,370 to not be closed anytime soon.
Count 1 : Price could be in wave iii of a flat correction that would take Nifty to above 18,100.
Count 2 : Price is in wave E of a bearish triangle. From earlier posts : A double zigzag would take Nifty to 16,500 ~ 16,700. A triple zigzag would take Nifty to 16,900 ~ 17,300.
In the very short term, the rally does not seem to be complete. 16,700 is looking likely, based on the very short term wave counts (not shown).
Nifty 50 Update. As on Fri 27 May 2022. CMP 16,300. Posted at 10 am.
Bottom line : Correlating Indian benchmark indices with the Nasdaq has now become the focal point for a likely end to a global rally that has begun a day or 2 ago. Why Nasdaq ? Because it is the only one of the major indices (or at least from the indices we cover) that shows a clear 5 wave impulsive decline from 16K to 11K. It is now upwardly correcting this 5 wave decline. Will post on Nasdaq again soon, but the last post is worth a read.
If we simply follow the Nasdaq, then the global rally has a large rally ahead. But will Nifty follow or turn down sooner ?
Nifty 50 Intermediate term count 1 :
A large flat correction that would take Nifty all the way back to at least 18,300 to complete wave b, before a significant decline kicks in towards the 14,200 level.
Nifty Short Term Count 1 : Price could be tracing out a leading diagonal in wave i to above 16,414 before a correction in wave ii sets in.
Nifty Intermediate count wave 2 : Nifty is in wave e of a bearish triangle to potentially 17,000 roughly before a decline to the 14,200 level commences.
Nifty Short Term count 2 A : New high above 16,414 would complete an ending diagonal and set the stage for a rapid decline to 14,200.
Nifty Short Term count 2 B : This count allows for further upside in wave E of the bearish triangle towards 17,000, but could end before that as well.
This count shows wave E unfolding as a double zigzag (or triple zigzag). A double zigzag would take Nifty to 16,500 ~ 16,700. A triple zigzag would take Nifty to 16,900 ~ 17,300.
Nifty 50 Update. As on 25 May 2022. CMP 16,130. Posted at 10:40 am.
Bottom line : Price is in a large wave 2 correction. 14,200 is a matter of time. One count allows for an upward test of 18K first before a significant decline. The other calls for a decline in not-too-distant future.
Count 1 : If Nifty is in a bearish triangle, the minimum requirement of 16,410 has been met. But wave E is short in terms of time. Small further rallies to 16,500 ~ 16,700 (or even upto 17,200) could complete wave E and set the stage for a decline to the 14,200 level.
Count 2 : Nifty could be in the early stages of a strong rally to the upside - in wave (c) of a larger b wave. For this we need to see some kind of clear 5 wave impulse on the short term charts, which is not visible as yet. The rally from the recent low of 15,737 to the recent high of 16,414 has been very choppy and not in 5 waves. But this count cannot be ruled out as yet, as an impulse could still develop.
If this count plays out, a decline to the 14,200 would be pushed back by a few months.
Market Commentary. As on Mon 23 May 2022.
Discussion of co-relationships between Nasdaq, Nifty, and Bank Nifty.
Bottom line : Short term bullish and Intermediate term bearish.
Starting off with Nasdaq : There is a clear 5 wave impulse down from 16K to 11K. We take this very seriously. If companies like Alphabet (Google), Facebook, Microsoft etc are going to decline significantly, then it is most unlikely Indian companies and indices will be spared. Moreover, the patterns on the indian indices are also relatively clear although there is no 5 wave impulse to the downside.
Nasdaq formed a 5 wave impulsive decline with the 5th wave as the largest wave. Within the 5th wave, it’s own sub-divisions show the 5th wave was also extended. This could mean a rapid rally in the Nasdaq back to the 61% – 78% fibonacci retrace at 14,500 ~ 15,500 levels, which also coincides with 4th wave of lower degree. This makes it an important resistance level. As long as Nasdaq does not exceed the all time high of 16,765, the 5 wave impulse remains an extremely important signal.
Bank Nifty : Since Nasdaq is the clearest of the major indices we have, a correlation with it would be a sensible way forward to deal with both Nifty & Bank Nifty. Bank Nifty has 2 counts, both are short term bullish to at least 36-37K. One of the counts calls for new all time highs above 42K.
2 seperate counts shown below.
Nifty also has 2 options. Both of which are short term bullish. One of the options calls for a rally above 18,300. See previous Nifty post for short term analysis.
2 seperate counts shown below.
Conclusion : With a major index like Nasdaq providing a clear signal, it would be unwise to ignore it. At least another 5 wave down below the recent low of 11,492 is on the cards, but first a significant upward retrace (rally) is likely.
Nifty 50 Update. As on Thurs 19 May 2022. CMP 15,917 . Posted at 9:13 am.
Bottom line : Large gap down due to U.S. indices tanking overnight. Until there is further evidence, the 15,671 (and hopefully) 15,737 level are expected to hold.
Primary count : The large gap down effectively makes it unlikely the clear impulsive rallies that we saw until yesterday will continue. This also likely means the large bearish triangle now takes precedence over the other count.
As long as 15,737 holds, Price is in a choppy rally in wave E of bearish triangle to the upside that will be punctuated by sharp declines.
Below is a projected path. If a double zigzag (WXY), wave E could reach the 16,600-16,700 level. If a triple zigzag, price could reach the 16,900 level.
Alternate count : If 15,671 is breached, then further possibilities open up. This count is just one of them. This shows price in a large bearish triangle in wave X.
Nifty 50 Update. As on 17 May 2022. CMP 16,200. Posted at 2:30 pm.
Bottom line : The 15,671 level and the 15,737 level held. Upwards and onwards till above 17K is the expectation. To avoid any unexpected further short term lows, an upside breach of 16,404 would confirm.
Count 1 : Rally to 18,000 ~ 18,100 in wave b of a flat correction.
Count 2 : Bearish triangle. Minimum requirement is 16,410 to complete wave e of the bearish triangle, but more likely is a rally to 17,000 in wave E.
Market Commentary. As on Thurs 12 May 2022.
We have a situation where Nifty and Bank Nifty are in conflict. In our experience, Bank Nifty usually wins out, but not always. As in all things market, anything can happen, but is useful to be aware of. Let us see if this conflict can be reconciled in any way.
Bank Nifty has an interesting pattern where a bullish triangle may be complete or almost complete. Whether today’s low has completed wave E, time will tell. A strong bullish pattern from here on BN may be just the tonic for Nifty to also test the 18,100 level.
The problem with this is if new highs are expected in bank nifty that means an upside of 25% from current levels. This may be a stretch, but it is possible as long as 32,155 (wave C of triangle) is not violated.
There is a way to reconcile Nifty and Bank Nifty : It is that Bank Nifty ends with a truncation at about 38K ~ 39K in 5 waves, but falls short of new highs in its larger 5th wave, i.e. does not exceed 41,827.
This would then bring back focus into the Nifty alternate count where a test of 18,000 ~ 18,100 could be on the cards.
It is early to say, as 15,671 needs to hold first. Now lets deal with what happens if 15,671 gives way ? Read below.
If 15,671 gives way, it is not necessarily one way bearish. There could still be significant bounces in the interim, with wave X taking the shape of a large bearish triangle, or even an expanded flat which would test the 18,000 ~ 18,100 level.
Preferred count as long as 15,671 is not violated is the one shown this morning, which shows a bounce soon to above 17K.