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Nifty Elliott Wave Update

14 Mar 2021 ‚óŹ 08:32 AM


 Medium-term trend Down then Up  15744 14300

Explanatory Note: Negative divergences precede a possible near-term market pullback.

For the week ended 19/02 Nifty formed an engulfing bear and this week's rally could not get past that high. We formed a Doji with an upper shadow, a sign of weak momentum for the time being. The weekly momentum remains in sell mode after a negative divergence in the RSI indicator. There is good evidence to get a slightly deeper or longer corrective phase here, and if that happens then this may be the best alternate wave count to consider in my mind. It implies a correction to 61.8% of the last rise near 14300 or back to the lower channel line near 14100. In terms of retracement, 23.6% of the 5 wave advance from Sept is at 14360 and 38.2% is at 13685. According to the alternate wave count, wave 2 of 3 did not end in Jan 2021 but may do so now. This could also be wave 3 itself but then 3<1 would have to be dealt with. We can keep that open. 

The weekly momentum for bank nifty remains in sell mode, and while the RSI indicator does not sport a negative divergence the momentum indicator does. The candle pattern is similar here, an engulfing bear in Feb followed by two Doji's left behind in the last two weeks. Doji = lack of momentum. So if we do get a further correction in bank nifty the new wave count will be as below, wave 4 down still in progress. The first level is 33760 at 23.6% retracement of wave 3. Then 61.8% of the last rise is at 32786, and lastly, 38.2% of wave 3 is at 31200. Not sure how bad it will get but let's watch the evidence as it develops.

Strategy wise on trading I sit on zero positions and all short-term bullish wave counts on stocks have to be ignored for the risk of going wrong till the market view clears up. The market comes first and stocks later. I am talking about trading not investing which is another game. A Small correction will not matter to investing long term and could be an opportunity.


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