AXIS BANK:End of ABC flat with C extention

Bounce in Axis bank from 650 low's is looking corrective in nature as the we are seeing too much of price overlapping.As the internal structure is 3-3-5 we can assume current correction as an ABC FLAT correction .

Notice wave C, 5 wave advance has formed a diagonal pattern where in wave 4 enter's wave 2 area coupled with a negative divergence between wave 3 and wave 5 or a wedge pattern as per classic technical analysis .Today we have seen 2-4 trendline breach of 5 wave rise of wave C giving us first indication of entire ABC pattern completion.

Aggressive trader can short this stock at cmp of 712 with a closing stop of 720 on hourly chart for an initial target of 700 and 691.For someone looking for more confirmation price should breach 700 level in tomorrow's trading session before 1:15 PM in order to get two stage confirmation and then enter short trade however risk would increase from that point.

If this is the completion of wave B of higher degree then we can see impulsive decline unfolding in 5 waves which can take price to previous low of 650 and even beyond.

As of now on higher degree we have already seen an 5 wave impulsive decline from the levels of 865-650.Considering this decline as wave A and subsequent rise from 650-720 as wave B we can see wave C impulsive decline in 5 wave making new low's below 650.I am mentioning this because if we are seeing a Zigzag 5-3-5 pattern unfolding on higher degree then wave B has only retraced just above 38% of wave A which is a indication of weakness.

As of now on weekly and daily chart bais is positive as we havent seen a close below previous days low,however on hourly chart stock has reversed from raising channel upper rasistance line and gave close below previous candles low and closing below 9 day ema on hourly chart there by suggesting first sign of reversal.

Action to be taken

1)For aggressive trader:Short at cmp of 712 if stock opens at same level tomorrow or in case of gap down wait for first 15 minute low's to be broken to enter short trade with a stop-loss of 720 for an target of 700 and 690.If trade goes in favor then stop-loss should be trailed to every previous candles high.

2)For conservative trader:One should wait for price to close below 700 on hourly candle before 1:15 pm in tomorrows trading session as that would give double confirmation of trend line breach along with faster retracement of previous swing.Target and stop-loss will remain same in this case also and as mentioned above stop-loss should be trailed.

Today we have formed a doji candle indicating indecisiveness among trader's,a breach of today's low on closing basis would also validate this analysis.Personally i feel longs should be avoided and any long position held should be protected with a stop-loss as per ones risk apetite.

Disclaimer:This are my views analysis done here is for my future reference position should not be build or exited on solely on it's basis.
Trade closed: target reached

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.