Last week we were cautious because astrologically moon had more than one event surrounding it and technically we felt that wave e was maturing…
As expected we saw a reversal, some spectacular, gut swooping volatility and a seeming continuation of the downtrend.
Since we are close to or in the midst of a top formation, (we do not yet know, whether it is short term or medium term), let us re-examine the long term pattern (monthly chart) we saw last time..that of Cup and Handle.
“Although it is a discretionary pattern, the cup-and-handle offers the opportunity to capture large rallies. The pattern forms when a stock sells off (the left side of cup), consolidates (the bottom of the cup), rallies back to the original sell-off level (the right side of the cup), and finally pulls back (the handle). Volume can be used as a confirming indicator when the pattern has been recognized. Trading the pattern involves placing an entry order above the market when the handle is formed, and placing a protective stop beneath the handle.”
So, we can technically have a top here with Diametric wave F ending shortly and wave G beginning downwards, shortly. Such a G, lasting several months, could pull down Nifty to the top line of Cup and Handle formation and form the classic pull back. This could take several months, and could well get us into the middle of 2015.Let us not forget that the single most factor of diametric formation is one of time equality, not price equality. The current F wave should mature in early September, having completed 13 months then. Even if we assume a G wave failure that could well take us into 2015.However the G formation also will have several ups and downs giving us many profitable trading opportunities.
So, the biggest up moves in Nifty are yet to unfold….
On the weekly chart, Nifty`s high was higher this past week and the low was lower. So was the close. Now this is decidedly bearish. Long weeks of overbought positions now look to unwind. In other words profit booking should continue. We follow the principle of sell on rises till the last sell gets negated.
We use the opportunity to move out of all speculative mid-caps and hold on to just the defensives.
In the daily chart,
The lower b-d channel line is now decisively breached. If 7442 goes, then we expect 7360 to hold for an immediate bounce, which could open up the final g leg of the second corrective in F.
Thus if there is a low formation this week, then we expect a bounce back. No anticipation, but just expectation.
Now after the upward g is formed also, Nifty can go through one more diametric formation involving another x wave. Since the channel is breached twice, that could be only a remote possibility. Which means if g tops out, and Nifty breaks the lower channel yet again, odds of G wave downwards having started will increase.
Faster upward bounce this week shall confirm that wave f wave is completed.
First corrective will achieve time cycle completion with the second corrective, by July 15
So, next week Nifty movement should be quite interesting.
In the 30 minute chart, we see the micro time cycle from the fall from 7800 levels nearly complete. This also corresponds with a tentative abc formation of the ongoing f wave of the second corrective.
Mars moves into Libra on July 14th.
Rahu also moves into Virgo, on the same date.
So does Ketu, from Aries to Pisces.
Venus moves from Taurus into Gemini.
Saturn becomes direct on July 20.
Uranus becomes retrograde on July 21.
This point to a fundamental shift in the investor and trader psychology. Apart from Jupiter moving into Cancer last month, the most important shift here is the movement of Rahu-Ketu axis from Libra-Aries to Virgo-Pisces.
Early morning today, Mars was conjunct Rahu, in Libra. And Venus was in trine to the Rahu-Ketu axis.
In short expect more volatility and also expect trend reversals in most markets.
Next critical time zone is between June 21 to 23, 2014.
Sun Mars square, Sun Jupiter conjunction and Jupiter Mars square will dominate in this period.
If any recovery happens this week, be watchful on the above dates. The trend could reverse downwards more forcefully then. If the downtrend persists this week, then expect a good up move in the period June 21 to 24.
As always, this observation is one of expectation and preparedness. We take action only when the Market Technicals tell us to do so. If we expect a down move and if the market breaks a key support, then we go in more confidently with shorts. If the market closes above a resistance, and we expect a positive move astrologically, we go long.