Nifty Elliott Wave Update

MARKET UPDATE: 21 FEB 2021

NIFTY
TIME	TREND	UP LEVEL	DOWN LEVEL
Medium term trend	Up	15432-15775	14230

Explanatory Note: Wave 3 of 3 or 5 of 1 which one is it? My heart says 3 of 3. Verdict still awaited. A move above 15460 = 3 of 3. Till then we can debate.

Note - this week I am traveling so the timing of updates may vary or change a bit, but should continue to be regular.

Is the 5th wave over for this rally is the common question for the nth time even though I discussed the alternates in the Long Short Report. I can say this, every correction ends up being short-lived and not more than a week. And since all other indices local sector indices, and global indices, and the dollar index, is in 3 of 3, that is the preferred view. A move beyond the recent top will confirm 3 of 3 again. A break below the 20dma at 14760 would increase the odds of 5th over for this move and wave 2 of 5 down of larger degree is open. But right now we can have a bias but not a conclusion. My bias is that this extends higher and will not be a deep correction. If the Nifty gets stuck then sector rotation will keep stocks and sectors booming on value buying. In the bad news on weekly charts, we have the first possible negative divergence in the Nifty since March. Weekly charts also have an engulfing bear candle this week. Next week's action will be important in confirming if I am right and these observations end up being false flags. The chart below shows my preferred wave count.

33250 is the major support on weekly charts near the halfway point of the big candle after the budget. The top end of the channel is now near 39970. The RSI for bank nifty does not have a negative divergence as does Nifty. On weekly charts, both impulse waves, 1 and 3, show clear 5 wave subdivisions. By that nature, I anticipate that wave 5 is also subdividing into 5 waves and we only completed wave i and ii of 5 this week.