Market Analysis With Megh Mody

In the month of January Nifty made all time high of 8996 levels missing marginally the psychological figure of 9000. Thereafter it corrected and made a low of 8470 levels, correcting almost 5%. The index surged from the lower levels and it is now quoting at 8833 levels. From the lows of 8470 prices continue to rise by making a higher high and higher low  and it has not breached its previous day low which clearly indicates that the trend is firmly positive. As per wave perspective, prices are moving in a corrective fashion (a-b-c). From the top of 8996 prices came down in (a-b-c) and it is now moving up in three wave structure, where it completed wave a at 8860 levels. Wave b is in barrier triangle formation which has 5 corrective waves in it (a-b-c-d-e). Probably prices have completed wave b in triangle formation and it is likely it will start moving up in the form of wave c which can test its previous highs or even cross it. In short, Nifty is expected to test 9000 levels in near

From February 2014 till date Bank Nifty is moving in a rising channel formation which clearly indicates that the trend for this index is positive. A channel normally helps to identify support and resistance levels. Prices recently arrived near the support of the channel and has witnessed a bounce. As per wave theory, prices are moving in a triple corrective pattern (a-b-c-x-a-b-c-x-a-b-c). Recently it completed wave b at 18226 levels of the third correction and it is set to start the last leg that is wave c of the third correction. Wave b has also retraced 80% of wave a, which means it is forming a flat pattern. The third correction is a flat pattern, this indicates that wave c will touch the end of wave a or can exceed above it marginally. Thus the level of 20900 is imminent. In short, As far as Bank Nifty is moving in an upward sloping channel the bias remains positive and prices can test the level of 20900 in near term.

Gold after making a low of $ 1100 levels in the year 2014, have started protecting its previous lows and crossing its pivot highs thus opening positive possibilities. However, from past 2 weeks the rally on the upside is facing a resistance at $1300 levels.RSI on weekly chart has also reversed showing signs of reversal. As per wave theory, prices have completed one correction (a-b-c) and it is now moving up in the form of next leg on the upside.  In the current up move it has completed one correction (a-b-c) and can give a minor reversal which can drag prices lower till $1250-$1230 levels. In short, a minor wave on the downside is expected in gold which can take prices lower till $1250-$1230 levels over short term. Gold Weekly Chart