murthyonline

Nifty 4th Wave Contd...What next

Education
NSE:NIFTY   Nifty 50 Index
Nifty -0.43% moved in the expected lines as mentioned in last Friday post.

a) It respected the range of 10870-11150 moving up and down with a downward bias.
b) The typical behaviour of 4th wave, as the trader does not know it will move up or down, is clearly visible.
c) The chart shows first and the events unfold later.
d) The first signal got out of Histogram and the second signal entered inside and ready to get out.

What is NOT mentioned last week and observed later is :
1. Lat Friday was an FA and exactly at T+5 days it revisited the last Friday low.
2. In the process an inverted cup and handle pattern is developing or already completed.

On Thursday there was a chance of the 2 SMA c/o of 5 SMA but it was a bull trap as the 2nd signal was inside histogram.

Now what seems probable is by Monday or Wednesday the 2nd signal will be out of Histogram and the 1st signal should
start moving towards the 2nd signal giving bullish bias but not at a very fast pace. In the event this happens then by the
time both the signals reaching converging stage, the Nifty -0.43% should move upto 11480-11550 area, which was marked
in the last week chart as the negation point for the correction.

When the MACD signals c/o, the histograms open above 0 and the 2 closes of price above 5 SMA can happen
simultaneously which will signal for the end of correction and a new bullish wave starts.

The chances of visiting 10500-600 area reduced to 10% now but still not ruled out. The range for the next week could
be 10850 to 11380 with a bullish bias. Any close below 10820 negates this range.

Above view is for purely educational purpose and may not be good for trades. No trades are recommended or advised on the above views. Please consult your Financial Advisors before taking any trade.

Comments

Hi - do you think we are getting close to a bottom? The weekly NS charts are showing a lower BB of around 10333 +/- and so is the Monthly chart mid band for the BBs. If the monthly mid band breaks then the bottom is around 9000 levels on the monthly. Is 9000 +/- a probability over the next few months? Thanks!
Reply
Are we assuming this is end of 4th wave if 10820 is protected on closing basis. Or even if it visits 10500 it will still be 4th & eventually 5th will resume
Reply
murthyonline VaniDugar
Reply
murthyonline murthyonline
, yes u r right. Check for 2 and 5 small 2 closes above 5 small. This will be 1st signal the direction is changed.
Reply
VaniDugar murthyonline
@murthyonline, What is the worst case scenario in 4th wave. Kindly update over the weekend.
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Does the inverted cup & handle mean that prices will go up to form the handle & then fall again ?
Reply
murthyonline VaniDugar
@VaniDugar,
Good question. Until it crosses B wave high it is always in 4th wave. Invarably when macd signal c/o price should reach near B high.

Inverted cup handle to be made and sometimes it is a very small affair and starts moving up. It is not necessary that it should visit the low again.
Reply
VaniDugar murthyonline
@murthyonline, High of Wave B is 11523 .Once it is taken out we can safely presume that wave 4 has ended & wave 5 is in progress. But Sir even wave 4 (falling in abc) must have a price limit. A point below which the labeling changes.
Reply
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