Last week was a textbook fifth wave. To me it looks like the fifth wave is coming to a conclusion. Lets study it in a bit more detail.
Long Term: We have reached the 2.618 times extension of the third wave of the trend that started in March. That means that a correction is upon us. I mean the market would have to be exceptionally bullish to keep rallying to a significant level even beyond this extension level. The market moved around 4500 points in this period. The correction should be of proportionate scale.
Medium Term: Even in the medium term, the trend it bearish. Even the last and final fifth wave of the uptrend that started mid-June seems to be about to get over. The market could go to levels of around 11,300- 11,500. That would also close so many gap openings that we saw in the internal third wave of the fifth wave.
Short Term: In the short term, the market could go a little up (to around 12,010 level before starting to decline in the internal fourth wave. The second wave was short and shallow. The fourth wave should be deep and sharp. 11,700 could get tested. After that the internal fifth wave is expected to happen. And then the correction that I have written about in the medium term.
How will I trade this? I will put a short position at around 12,010 levels. Stop Loss at 12,300 (loss of Rs. 21,750). Profit booking at 11,500 (profit of Rs. 38,250).
And as always, I could be right. I could be wrong. I am always learning. Trade at your own risk.
Long Term: We have reached the 2.618 times extension of the third wave of the trend that started in March. That means that a correction is upon us. I mean the market would have to be exceptionally bullish to keep rallying to a significant level even beyond this extension level. The market moved around 4500 points in this period. The correction should be of proportionate scale.
Medium Term: Even in the medium term, the trend it bearish. Even the last and final fifth wave of the uptrend that started mid-June seems to be about to get over. The market could go to levels of around 11,300- 11,500. That would also close so many gap openings that we saw in the internal third wave of the fifth wave.
Short Term: In the short term, the market could go a little up (to around 12,010 level before starting to decline in the internal fourth wave. The second wave was short and shallow. The fourth wave should be deep and sharp. 11,700 could get tested. After that the internal fifth wave is expected to happen. And then the correction that I have written about in the medium term.
How will I trade this? I will put a short position at around 12,010 levels. Stop Loss at 12,300 (loss of Rs. 21,750). Profit booking at 11,500 (profit of Rs. 38,250).
And as always, I could be right. I could be wrong. I am always learning. Trade at your own risk.
Trade closed: target reached:
Trade closed. Profit of Rs. 38,250.