Nifty: Market Structure under Lens

NSE:NIFTY   Nifty 50 Index
Classic definition of a bull market is the market having a structure representing higher lows and higher highs . But when the market breaches a significant swing low, it also breaks the bull market structure.

Why are Swing Lows important?
While most of the long to medium term smart bulls enter at swing lows, many swing traders and medium to long term investors put their stops under these swing lows. The breach of a significant swing low not only takes the prices down sharply but also diminishes the bullish sentiment.

The NiftyIndex has not breached any of the immediately preceding significant swing low made since December2016. Only in April and May 2017 these swing points came under risk but were not broken. So far, this bull market structure has kept the bullish sentiment intact for the bulls to buy the lows.

But the current price action of the market has put the bullish structure under scanner.
Market decisively broke a long term trend line , made a significant swing low at 9560, kept the swings intact and reversed. It then failed to cross the trend line and fell sharply. The bearish candles at these levels are pointing towards further weakness. BUT the swing at 9560 is still not breached and the bullish structure is intact. There could be a possibility that we enter into range bound market OR we may breach 9560.

What if 9560 is breached? Then bull market structure would be broken. Many long to medium term stops would be hit, volatility will increase with wider spreads. The bullish sentiment would be faded, and perhaps we may face a deeper correction.

Lets see how the price action unfolds.
Do share your opinion and hit the like button for better posts in the future.

Trade Safe, Stay Healthy.

Best Regards
Disclaimer: I am not an expert in Elliot Wave. Try your own count if it works better.The count is based upon Elliot Wave Oscillator. I am using 5 min. chart because the waves are quite visible on this timeframe. This view is for short term only.

As this count suggests, for the last downleg from 9698, we are currently in wave 5. There are chances that it will extend beyond the low of wave 3. But as we see Wave 3 is an extended one, so wave 5 may not be as big as wave 3. If we take 1:1 price extension from June2017 highs (9709), for an a-b-c type correction, the potential target comes out to be 9550, which could act as a possible support. Wave 5 may end at this level followed by a swift pull back.
Comment: Let's see if this Elliot Count works? Opinions r welcomed.


NIFTY FUTURE may give some answer as
Mirror of Nifty spot is NIFTY Fut.
If we consider OI of NIFTY Option of JULY Series (as Jun Series Expires shortly),
Scenario is: for CALL Option Addition / REDUCTION
NIFTY 9900 CE has seen the Max OI Addition of 342450 (Total OI: 1499925). Followed by
NIFTY 9600 CE has seen the Max OI Addition of 288675 (Total OI: 1226925). Followed by
NIFTY 9800 CE has seen the Max OI Addition of 162900 (Total OI: 1816200)
& NIFTY 10100 CE has seen Max OI REDUCTION of -9300 (Total OI: 565050)
& For PUT Option Addition / REDUCTION:
NIFTY 9400 PE has seen the Max OI Addition of 727200 (Total OI: 3044700). Followed by
NIFTY 9300 PE has seen the Max OI Addition of 231150 (Total OI: 1748925). Followed by
NIFTY 9500 PE has seen the Max OI Addition of 106350 (Total OI: 1308825).

Till NOW not witnessing much more Downside.
Significantly NIFTY 9700 PE HAS SEEN Max OI REDUCTION of -88,350 (Total OI: 567825), here is a link of Weekly Chart.

Compare with Weekly Candle of AUG 2016
+1 Reply
@DSKF16, thumbs up for your analysis. Normally structural breaks follow larger corrections. But as i mentioned structure has not yet broken, it's just signalling. So we might be range bound if buyers hold the low.
DSKF16 Bravetotrade
@Afraidtotrade, Agreed. One question arises in my mind, who Covered ITM JULY PUT Option?
"NIFTY 9700 PE HAS SEEN Max OI REDUCTION of -88,350"
@DSKF16, may be profit booking by some bears.
DSKF16 Bravetotrade
@Afraidtotrade, So, can say Lacking of Confidence.
@DSKF16, may b some forced liquidation.
@DSKF16, if the bullish scenario you are pointing at is true, we should see 70-100 point gap up or rally of that magnitude on Monday to continue the uptrend..just an opinion.
DSKF16 Bravetotrade
@Afraidtotrade, Monday Our Market will Close, where Global Market is OPEN. Think clear picture will seen after 01.30 AM of 27/06/2017.
@DSKF16, yes. I meant next session :)
Great Analysis by you and @DSKF16, some useful insights to read about. Keep it up mates. Regards
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