20 Feb 2017

RETAIL RESEARCH
Weekly Technical Report

Weekly Technical Report
A chart speaks one thousand words

“Support at 8715”

Technical Research Analyst: Gajendra Prabu
E-Mail: (gajendra.prabu@hdfcsec.com)

RETAIL RESEARCH P age |1

RETAIL RESEARCH Nifty [CMP-8821.70] RETAIL RESEARCH P age |2 .

 As per our preferred wave count: Cycle degree “wave i” has started from 4531 level and ended at 6229. Likewise we kept the alternate of “wave x/iv” for the cycle degree fall started from 9119.2% and 50% levels are placed around 8520 – 8400 levels. Now we are in cycle degree “wave v” which is heading towards 10.8400. any breakdown could lead to minor correction. The larger fall from 9119 to 6825 was cycle degree “wave iv” down. The dynamic “wave iii” has started from 5118 and ended at 9119 with a couple of extensions. however it is also having five wave advance. Though it was a positive close compared with last week but the gain doesn’t show any significant strength on chart (Doji Formation).  Index has reached the overbought zone in RSI oscillator which hints that there may not be big upside before we see decent correction. RETAIL RESEARCH P age |3 . In simple terms.  The index has started showing weakness consecutively for the second week. however the pattern could get validated when index breaks below 8715 levels. on a fall below 8715 it could slide down to 8520 – 8400 levels in forthcoming weeks. Earlier the rise from 6825 to 8968 has five wave advance but we labeled as a-b-c-d-e as we had not seen clear impulse in the 1st leg. so we have to assume there might be some missing wave in the 1st leg of previous rising leg. RETAIL RESEARCH Observations: [Earlier Indications are in Italics & All levels are in Nifty Spot/Cash]  Week’s action formed another doji candle at the resistance zone which is bearish reversal formation. the current scenario seems like a tug of war between bulls and bears. now we have confirmed that the end of 6825 is cycle degree “wave iv” and cycle degree “wave v” is in progress in which the rise from 6825 to 8968 is major “wave i” and the fall from 8968 to 7893 is major “wave ii” now Nifty is in progress of dynamic major “wave iii”. Also index is trading near to the support. but now again there is another five wave advance in the rising leg.]  Two consecutive dojis indicates that something is cooking majorly in the index. higher tops and higher bottoms is continuing in both daily and weekly charts which keeps uptrend intact. Now we are labeling that as 1-2-3-4-5 instead of a-b-c-d-e.000 mark. [Overall traders can maintain neutral stance as long as index trades below 8883 and wait for the correction of minimum 300 points correction for buying opportunity.  Price is near to the 2-4 trendline.  If index breaks below 2-4 trendline and moves below 8715 then we could confirm that the current rising leg has ended and it has started to retrace the last rise. also there is a chance that this divergence could cancel out if index does not give up.e.  Overall traders can maintain mildly positive or neutral stance as long as index trades above 8715 for the target of 8883 – 8900 and if any break below 8715 then we could see correction for the downside targets of 8520 . The “wave ii” has started from 6229 and ended at 5118. As long as index trades above this level it could continuously move sideways or form minor higher tops and higher bottoms.  The bullish continuation structure i. The 38.  Minor negative divergence has been witnessed in RSI which may resist the bulls to move up further. current value is placed at 8750 levels but we keep the trigger at 8715 for clear trend reversal.

2% and 50% of last rise which are placed around 8520 – 8400 levels. Finally now we are in “wave v” which is last rising leg of the current rising segment.  The changes are: earlier we have completed the “wave iii” at 8672 now it has shifted to 8827. Previously “wave iv” was marked at 8537 which has now shifted to 8715.  When the fifth wave ends. we could see a short term correction. RETAIL RESEARCH P age |4 .  Index found support at the previous minor swing support of 8715 and rebounded from there which suggested us to redraw the 2-4 trendline. RETAIL RESEARCH Nifty – Internals  The daily chart of Nifty shows internal count structure.  Now the current value of 2-4 trendline is placed at 8750.  The rise from 7893 to 8461 is “wave i” and the fall from 8461 to 8327 is “wave ii” then the rise from 8327 to 8827 is “wave iii” and the fall from 8827 to 8715 is “wave iv”.  If index starts correcting then it could test the golden retracement levels of 38. also make minor changes in the internal swings.

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