Medium Term Trend: 👈👉Sideways (Changes to up above 15200 & down below 14300)
Nifty @ 14835 down 39 points - Still in consolidation mode
Last week, Nifty had closed at 14860 levels and this week again market has closed amost at same levels (more or less) which confirms that market are not in any trend and just consolidating. After a sharp pull back last week we had hoped that consolidation would probably be over and market is ready to break on the upside. We had also discussed that its likely that market has completed ABC correction @14260 levels and opened a fresh leg on the upside. We had mentioned that-"Nifty needs to break above 15250 in next 5 sessions to confirm the breakout. If not, then will analyze it and discuss in later posts"
Today was the fifth session and market still has not moved beyond 15250 levels which forces us to have a rethink and look at charts with different perspective. Overall there is still no change in our view and we do expect markets to breakout eventually and the breakout should ideally be on upside. Markets have spent too much time in a narrow range & its unlikely to see any major fall after a such strong consolidation.
Looking at charts, 2 possibilities are emerging now:
A.One likely scenario is that C leg didn't finish @ 14260 (as we had discussed last week) but actually @ 14460 levels on 5th April ( last monday). C leg got extended and took form of 'extracting triangle' so instead of 9 days, it consumed 14 days. If true then it means that fresh leg started on tuesday (6th Apr) & Nifty still has around 10 trading sessions to break above 15200.
B. Other scenario is that from the day low of 14260 was hit till today again 9 trading sessions have passed ( we discussed how the each leg is consuming around 9 days). Which means C leg consumed 9 days and finished at 14260 & yesterday/today D leg got over and has already consumed around 8-9 days.Now market should open another leg(E) which could again take market down to 14500 (or lower) levels.
Simply speaking, if the first scenario plays out then market should start moving up in next few days and break above 15200. Moving above 14950 in next 1-2 session will be a strong indication that first scenario is playing out. On the contrary, if its the second scenario, then we could see some weakness in next few trading sessions accompanied by some sharp fall. E leg generally tend to be shorter so it may or may not last or 9 trading sessions.
Point to note is that in both scenario market is likely to move up only ( its just a question of whether the upmove start immediately or it start with one more down leg). Entire analysis and perspective will change in case market break below 14260 levels.
Happy Trading!
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