NIFTY Oct Fourth Week

Oct 18, 2020

The fourth wave in the 15 minute timeframe last week looked like a flat. It was simple and shallow. The second wave was complex but also shallow. That violates the principal of alternation. Could it be that it was a descending diagonal so what we saw was only the first wave. Time will tell. To me the market now looks poised to decline further.

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: The last and final fifth wave of the uptrend that started early-July seems to be about to get over around 12,150 levels. The market would fall after that in a natural correction. This would also close the powerful third wave of the uptrend that started mid-June. This third wave was a part of the super-powerful third wave of the rally that started in early April. So the overall expectation is that the market would fall.

Short Term: In the short term, I expect the wave of the zig-zag decline to end around 11,850. After this the [c] wave should start. It could take the market to as low as 11,500. That would complete the zig-zag correction internal fourth wave wave of the small rally that started in the last week of September.

How will I trade this? Place a short order at around 11,850. Profit booking at 11,500 (profit of Rs. 26,250). Stop Loss at 12025.45 (Loss of Rs. 13,143.75).