Nifty to test 5700-5650 over medium term

Anticipated on 3rd February 2013

Happened on 9th February 2013

We had mentioned in our previous update, " Nifty will now move lower and can test 50SMA which is placed at 5900 and lower trend line of the rising channel over short term." - Bang On!!

After giving a bearish breakout in a rising wedge pattern prices moved lower as per our expectations and achieved our mentioned target.

Nifty not only touched 5900 mark but closed below the lower trend line of the rising channel which was earlier acting as a crucial support. Nifty is quoting below 50 SMA for the first time after making a top at 6112 and it is imminent that there will be a bearish crossover of 20 EMA and 50 SMA soon which will infuse more selling pressure.

In an Ending Diagonal Pattern prices retrace faster up to 1/4 to 1/2 the time taken for the entire pattern to form. So by the end of February, Nifty might test 5700-5650 or even lower till 5600.

As per wave perspective, prices completed wave v of wave 5 at 6112 and has started the next leg on downside. On a smaller degree prices a forming a simple zigzag pattern (a-b-c). Currently prices are moving in wave 1 of wave c as it is impulsive in nature.

Indicators like RSI, MACD, ADX, MFI etc continues to be in a sell mode with no signs of reversal which indicates that prices has lot vaccum to move on downside. Advance/Decline ratio continues to be at its worst where advance is at 449 against decline at 1077

In short, Nifty will continue to move lower and will achieve 5700-5650 mark. Sell on rallies will be the best strategy one can adopt to initiate fresh shorts. 


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