1. A bearish wave in the making. And this one is a big bearish wave whose 6th point lies somewhere around 4300-4400. Sounds terrible? Yes it is. We are poised for a big and major correction. I repeat a major 'correction' and not the end of the bull run. The final northbound rally will happen only after this correction. The top of the current rally has probably occurred around the highs of 5398. Maybe after todays dip, we will see a bounceback. Probability says that the bounceback will last till 5368-5378 which was the closing highs recently. Now that may get extended to even 5450 +/- but thats something only the markets knows. What I know is that we are ready for a massive correction with panic selling.
2. Again look into the "Mirror Image" theory.
The points encircled in both sides marking the resistances and supports in red and blue respectively. So far the mirror pattern held true with only deviation in the time scale. So, unless there is any price pattern deviation, we should be holding on to the hypothetical theory.
3. Thirdly, the FII's bought in huge quantities in the last 2 months which need to be ofloaded at some point of time. Whenever that happens, the supply pressure will be too high to create demand based support. Also, the favorites of last year or the so called retailer's interest seem to have been a forgotten chapter as of now. Even when the index ran from 4600 to 5400, many stocks were 30% down from the January highs. So unless the retailers are out of these scripts, it will be difficult for them to move up. I guess, if Nifty comes to the zone which I presume, most of the scripts will be free from holding pressure and they would then propel to new highs......
4. Also, VIX is again at sub 17, which is the historical lows. A technical bounce is expected there as well.....
So, just be cautious and trade accordingly....
Happy trading!!!
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