Nifty is truly at cross roads now. Point E is the August 2013 low of 5119. Since then Nifty has been forming a triple combination consisting of a diametric till wave x and then another diametric till 2nd x. SAfter that it looked like it was forming a third and last diametric, but at the crucial leg e, it had weakened considerably more than it should and it has also formed a low weekly and monthly closing.As per Neo wave, triple combinations must end with the 2nd x formation.
So now we have two possibilities:
1. The last wave is forming an irregular flat, of which waves a and b has been completed and what is remaining is the last leg c of the flat. With that e is over,and we may have f down and g up, before the triple correction is finally over.This would mean the final culmination could come in two months.For this Nifty must strongly move up and close above 8845 in the next several weeks.
2.After 2nd x, we are not forming another diametric at all, but a triangle whose last leg is e and has been completed at 8845. This would be confirmed if Nifty moves up, closes wel below 8845 and then moves down and breaks 8065 on a closing basis.If so then we could see 7000 levels in Nifty pretty quickly.
By regular TA, we see lower top and lower bottoms being formed and this also supports option 2.
In the monthly chart also, Nifty has formed the second consecutive bear candle and has convincingly broken out of the long term 45 degree line.We have seen that in the past, if the original timing line of 45 degrees is violated, then Nifty tends to take support on another parallel line to the 45 degree line.It is marked in black.Another significance is the slope of the green arc.This is intercepting the black parallel line at 7724 or thereabouts, in about two months time. If this line does not hold then we look to the black arrow line along the red arc, to 6700 levels.
Let us focus a little closer...
And the daily...
This points out to a 8500-8600 level of retracement immediately. So the longer term charts are suggesting more weakness and the daily chart is suggesting a pull back..
Simple angles point out that the time and price squaring is nearly over and a pull back could happen this week, upto May 13 to 15.
Extrapolation gives us additional dates into the future...
Nifty could bottom out temporarily in a day or two and start a pull back till the middle of May, 2015.
Of course we move only if prices confirm..