On May 11, 2013, Nifty had fully retraced the fall from
6111.80 to 5477.20.While the fall had consumed 49 trading days, from January
29, 2013 to April 10, 2013, the retracement had been pretty quick- in just 20
days.
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As per Neowave if the correction from 6111.80
has to be a flat, then it has to form a 3-3-5 structure. Wave A down, from
6111.80 has exhibited a 3 wave down formation.
·
So by the same logic, what we are seeing in wave
B so far, in the retracement from 5477 upwards is just wave a of B.
·
We do not yet know if wave a of B is completed. But
the risk reward ratio is tilting towards shorts, after 20 days of up move.
Traders also realise this, which is reflecting in the reduced volumes.
·
We still have to see wave b of B downwards and
Wave c of B upwards.
·
And this has to take time to complete-
approximately a minimum of 30 more trading days.
·
Any which way we look at the situation, we are
seeing a Wave B which is going to be stronger than wave A.
·
If the completed wave B terminates between 6112
and 6262, then also the consequent wave C has a good chance to go down to 5477
levels in a 5 wave impulse down.
·
If the completed wave B exceeds 6336-6354, then
wave C down, will not go beyond 5796. In
that case we will be looking at an Irregular flat with C wave failure, which
will be very bullish for the next development.
·
If wave B terminates at these levels itself,
that is wave b of B retraces to 5750 levels and then again wave c of B comes up
to 6111 and then falls off, we can see the resultant wave C going beyond 5477
in a 5 way down move.
Our immediate requirement is to know when a of B will end?
Astrologically we are still in the reversal time band- so let us wait and watch.
Personally I prefer to wait for price to close below the little blue and red
averages, before taking a short. It will be prudent for longs to book partial
profit and trail the rest positions with a tight stop loss.
Happy and safe trading!