This week is very very important. It is almost as if the market closed last week at a cliffhanger. Divergences in oscillating indicators have started to show up indicating a possible end of rally. A sustainable close reasonably above 10,500 would mean that the bullish market we have been seeing for the past few months is not just a correction to the sharp decline of March. I guess only next few weeks will clarify that. If it is indeed a correction, then the resulting downturn could take the market to around 4000 levels. At that point, I think NIFTY would be least of our concerns as we could all be looking for jobs! Personally, I think that it is a genuine bullish market. And that we are either in Wave 3 or Wave 5 presently.
If it is indeed a bullish market, then from the the wave count of the hourly chart the trend seems to be up. We are in Wave 3. That would mean that the market would reach around 10700.
If we drill further down. In the 15 minute chart, we see the indecisiveness in the market. A complex correction happened with three consecutive patterns - Zig-Zag, followed by Flat, followed by another Zig Zag! This is the first time I am seeing such a complex pattern since March that I have re-started doing this. I think the trend is up and we are in wave 3 of wave 3 of wave 3.
How will I trade this? If the market does not open with a significant gap, I would buy at open. I would want to exit at 10700 (Profit of Rs. 7,350) but that would not be a good risk reward proposition so would count on the extension that is typically seen in wave 3. I will add further to my position at 10,500 if the market dips and then would exit both contracts at 10,700 (Profit of Rs. 22,350). I would book a loss at 10,350 if the market continues to move down (Loss of Rs. 18,900, Loss of Rs. 11,250).
And disclaimer as always. I could be right. I could be wrong. I am always learning. Trade at your own risk.
If it is indeed a bullish market, then from the the wave count of the hourly chart the trend seems to be up. We are in Wave 3. That would mean that the market would reach around 10700.
If we drill further down. In the 15 minute chart, we see the indecisiveness in the market. A complex correction happened with three consecutive patterns - Zig-Zag, followed by Flat, followed by another Zig Zag! This is the first time I am seeing such a complex pattern since March that I have re-started doing this. I think the trend is up and we are in wave 3 of wave 3 of wave 3.
How will I trade this? If the market does not open with a significant gap, I would buy at open. I would want to exit at 10700 (Profit of Rs. 7,350) but that would not be a good risk reward proposition so would count on the extension that is typically seen in wave 3. I will add further to my position at 10,500 if the market dips and then would exit both contracts at 10,700 (Profit of Rs. 22,350). I would book a loss at 10,350 if the market continues to move down (Loss of Rs. 18,900, Loss of Rs. 11,250).
And disclaimer as always. I could be right. I could be wrong. I am always learning. Trade at your own risk.