Nifty 60 mins.
Nifty Daily.
Nifty in a matured Downtrend.
In our previous post we mentioned that the uptrend has matured and that the downside has began. We also mentioned the levels to which the Indian benchmark index gave high respect and achieved all our targets.
For now, lets observe the above two charts. Both charts have one thing in common and that is weakness all around. Both the 60 mins and the daily chart do show any kind of strength, leading to a free fall in the market.
With bears gaining power in all the sectors and stocks, at the time when Nifty was at approx. 6175, one could have said that the principle of Dow's theory which says that the averages must confirm, was personified. For eg: If one looks at the Daily chart of Bank Nifty and Yes bank he could easily make out the co-relation between the two. Both have acted in a similar manner and broken down giving similar patterns.
I have personally felt by my years of experience in TA that with all the tools, methods and techniques available in our subject Dow Theory has always been the foundation for everything. Even after extensive and hard core study as well knowledge of complex studies like Elliott and Gann, the Dow theory has stood a class apart and has always helped me to keep things simple and achieve amazing results; with the above mentioned complex studies just acting as a helping hand to the basics.
In the 60 mins chart, we can see that nifty first broke it's downward channel bounced back a bit but just to complete the level of channel breakout and again coming back and moving in the same downward channel. The up move not moving above it's previous high again alerted us of a matured downtrend. Another important factor to notice is the movement of RSI during that period and the moving average acting as an significant tool. Price not sustaining on its highs and breaking the MA was convincing enough to make a selling position once again.
At this time even the daily chart broke it's symm. triangle, again confirming the principles of the Dow Theory.
With all factors, saying just one thing: Sell.......Sell......Sell; one should be bearish on the Indian benchmark index.
But the important questions which arises now is, till when will one continue to be bearish?
Yesterday, nifty closed at 5772. A break below that will lead it further down to approx. 5660 and then to approx. .......... However, the most important thing to be dealt with is the situation if Nifty retraces ...... than .......% of it's previous up move, i.e. if Nifty moves below ........ levels. If this breaks down, it will create disaster in the market. And then Nifty can even fall till ..........
Wait! Their is something else in between as well. And that is the formation of Elliott Waves on the daily chart, which shows that currently the fourth wave is in formation, which can retrace a maximum up to 5600. So, be cautious as this is the last level of the current wave formation. Nifty has a tendency to bounce back anytime before this level, which is now not so far.
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