BSE Healthcare

BSE Healthcare index has seen a sharp decline in today's trading session but for now, it looks like a sharp correction in wave II wherein it retraced 50% of the recent five-wave and has touched the 40DEMA and the daily lower Bollinger band. Maybe the correction in the index can extend to the 61.8% retracement level i.e. 25290. Ideally, the correction in wave II should get complete around the 61.8% retracement level in the worst case, and then the BSE Healthcare index should resume its uptrend and start wave III on the upside. 

However, if the 61.8% retracement level is broken on the closing basis then the alternate scenario could be that the entire rise from March 2021 to July 2021 could be a five-wave rise, and then the correction of that up move can kick in. The reason why this scenario is possible is because the weekly momentum indicator will turn bearish if the index doesn't recover by the end of the week. So there is a chance that when the BSE healthcare index completes the correction in wave 2, the weekly momentum indicator may have also completed its pullback cycle. That said, from the long-term perspective, the outlook still remains bullish but in the short-term, there could be some pain if the alternate scenario plays out.