We are trading now in a Sideways corrective Market in the Short Term ( Wave B as per EW counts ), in a broader range of 4700-5100 . Next week we enter the tricky part of this correction in larger downtrend which may see both an upmove and down move in a choppy market .
1. Daily Chart :
The Bird's eye chart for our Short term trading ,the Daily chart, is in a sell mode. The Upmove since 4639 resisted right at apprx. 62% retrace . The break of the Uptrendline as shown in the chart has weakened the Upmove and now has a Resistance at apprx. 4950 level.
2. Hourly Chart :
Our Trading chart , the 60 min , is in upward mode , which may give an initial upmove ( also suggested by the SGX Nifty trading after Euro news ). The Uptrendline broken is further zoomed here with Resistance above 4950 level as we move ahead in the week. One should also mark the Gap left during the Upmove since 4639 , with Gap fill now at 4720 as marked in chart.
3. Weekly Moving Averages :
We mark 5week Moving Averages to judge the Trend , which broadly moved between the High ema and low ema in the last week . Now as marked in the chart , 4950 level (the 5w ema ), will act as a Pivot for this week and upmove only on close above it . Breaking of low ema , 4840 , will weaken the structure .
4. Volume Profile :
As only Price and Volume are the absolutes in this Market , a Volume Profile chart is an important Indicator . The 10day Profile shows the POC at apprx. 4960 level which will now act as Resistance . 4810 is an HVN which will give support but as per volumes there , it may not be a strong one .
5. Option Data :
The build up of Open Interest at 4700 Puts and 5100 Calls , suggests this as a broader trading range for this Series as of now . 4800 level with more puts than call is the immediate Support and 5000 strike with more calls than puts is the the Resistance for this week. So 4800-5000 may be the broader range for the week ahead.
6. FII stats :
Though the FII's were buyers initially in this week's fall , now they have turned seller in last trading session . But point to be marked is their huge selling in last two sessions in the Derivative segment . It suggests their down ward bias .
7. Elliott Wave Analysis :
Taking the Basic count of a Triple Zigzag from Highs of 6338 (reference posts at sidebar ) , we may have finished the second intermediate wave , XX , at 5400 level after Diwali. As marked in the Daily chart below , the wave A of the third zigzag may have been over at 4639 and now we are in wave B of the third zigzag which may target the fibo level as shown in chart below .
This is also the 'Sucker wave' which may take more time than wave A ( may be this whole series ) and make many traders Bullish, as its meant to do, before unfolding a Fast and Furious wave C down.
The wave B may have finished its sub wave a-B at 5099 and now in subwave b-B which may retrace as Fibonacci levels shown in the chart below. We already have covered near 60% of retrace in last week .
Now in last week's trading the subwave A-b-B may be over at the last session low of 4842 . The counts in 5 min chart suggests it to be a 3 wave move . so the wave b-B in may now be a Flat (3-3-5) or a Triangle(3-3-3-3-3) . The 5 min chart has a tentative EW route suggested under ideal conditions for the Short term .
This week may see the trade in B-b-B up and C-b-B down. The likely wave B-b-B may retrace as the fibo. levels shown in hourly chart below , 4970-5000 may be a target for B-b-B upwards followed by a C-b-B down .
So concluding the above Analysis, the Resistance is near the 4950-5000 range with a probability of retesting and may be breaking the low of 4840 to fill the gap at 4720 . In all may be a Choppy, Volatile Trading Week ahead, so be cautious and light .
Have a profitable week ahead !!!