Nifty downtrend will be confirmed if it slips below 7,808

By Mazhar Mohammad

MUMBAI: Scary fall of the last few trading sessions, both on domestic and international bourses, failed to conclusively damage the uptrend prevalent in Nifty.
We expected correction not to exceed beyond 7,840 levels but markets in its wisdom has breached this critical level on intraday basis and chosen to bottom out at a low of 7,815 registered on October, 08.

This intraday breach nullified our preferred wave count but still we have two more alternative wave counts which are adhering to all the rules and principles of Elliott Wave Theory.

Hence despite global jitters and a scary fall even after ‘positive noise’ out of minutes released by Federal Reserve, we remain positive and based on Elliott wave counts and weight of technical evidence present with us we categorically conclude uptrend shall remain intact as long as Nifty trades above 7,808 level.

For this up move, internal wave structure relationships are projecting targets present in the zone of 8,212 – 8,272. If markets doesn’t top out in this zone then based on Elliott Wave Logics this move can extend maximum to the level of 8,455/8,554 before concluding this ongoing leg of up move. However, if market breaches the level of 7,808 then downtrend will be confirmed.

Our alternative wave counts will become invalid and we have to retain our preferred count and will be forced to conclude that Nifty made a truncated top, in Elliot Wave Terminology, at a recent high of 8,160 registered on September,19 against absolute top of 8,180 registered on September,08.

In such a scenario we have to conclude that market trend is down and should be ready for sharp cuts and multi month corrective or consolidation phase(may be for another 1-2 months) . Based on this technical evidence we recommend aggressive traders to create long positions with a tight stop below 7,808 for targets of 8,200 levels on Nifty.

In simple words market trend will remain up as long as Nifty trades above 7808 level and downtrend will kick in if this level is violated.

Support: 7846, 7815, 7784 Resistance: 7924, 7947

(The Analyst is Technical Research Strategist, Chartviewindia.in)