#Banknifty directions and levels for the 2nd week of October.Current View:
The current view based on the RSI data is as follows:
* The RSI divergence is likely to occur in the sub-wave 5. The structure suggests there is a 5th sub-wave forming. Once the market starts to bounce back, we can close the 5-wave structure in the 1st leg of the correction, leading into the 2nd leg.
* The ideal 2nd leg is a three-wave structure, which could take a minimum of 38% to 61% bounce back from the previous swing.
> In rare occasions, it could reach 78%. Structurally, it won’t go beyond this level; however, if it does, the overall trend will turn bullish.
* Once the three-wave structure (2nd leg) completes, the 3rd wave will begin. The 3rd wave is a correctional wave; if it rejects and cuts below the EMA20 line, we can assume that the downtrend may continue further. This is our first variation.
Alternate View:
* The alternate view suggests that if the week starts with a negative candle, it may evolve into a diagonal structure.
* A diagonal is a time adjustment pattern, so the correction could continue with some minor bounce backs.
* However, the diagonal also indicates a sub-wave of the 5th. Once the diagonal pattern breaks upwards, the previous sentiment will apply here as well, meaning we can expect a minimum of a 38% bounce back from the previous swing.
