WAVE STUDY AND INDICATOR CONFIRMATIONCRISIL seems to have completed the correction at least for a shorter term. Wave counting is clearly mentioned on the chart. I request you not to get confused with Wave 2 as it is lower than the initiation point of Wave 1 but visible in Candlestick Chart. As the correction of Wave 2 have been really sharp ie. It was completed in 8 Days with 609 Points of Up move, that is why the Wave 4 is Sideways ie. It was completed in 64 Days with 438 Points of up move.
Wave 1 , 3 & 5 are in Fibonacci Time zone sequence. Wave 1 has taken approximately 13 days for completion, where as Wave 3 has taken 32 days and Wave 5 has taken 105 days. If the mathematics is done the ratio stands to be at 1:2:3 Approximately. Hence it is a well structured wave. Wave 5 for downside seems completed now. It comprises of 5 minor waves and the end is a Truncated Wave. Where the bottom of Wave (iii) & Wave (V) of Wave 5th are same .Explaining the reasons for the truncation will take longer, so let’s skip the theory.
Few key indicators that we should focus on are ROC, RSI & Candlestick Pattern .
ROC: ROC (21 Days, Close) has breached the EMA ( 21 Days, ROC) during the formation of the bottom of Wave (iii) of Wave 5th but has taken a good support over EMA ( 21 Days, ROC) during the formation of the bottom of Wave (V) of Wave 5th. This is a sign of bullishness that cannot be ignored.
RSI: RSI (14 Days, Close) on 9th Nov at the bottom of Wave (iii) of Wave 5th was 28.25 and on 7th Dec at the bottom of Wave (V) of Wave 5th the RSI (14 Days, Close) was 31. Hence such pattern is called Exaggerated Divergence as the bottom of Wave (iii) & Wave (V) of Wave 5th are same but in RSI a higher low is formed.
Candlestick Pattern: An upside reversal is better marked with a close above previous day high and a low above previous day low. Of course this happened on 8th Dec and last time when the same happened was on 10th Nov during initiation of Wave (iv) of Wave 5th .
If we take a conservative approach the first expected target should be 3138 as per Fibonacci Retracement basis. SL should be below 2800 on closing basis.
CHART & ANALYSIS
ADARSH DEY
