NIFTY : Is still Panic Ahead?
In Continuation of my last analysis on 27-Jan-2025
Updated on Daily Charts
Bullish Wave Completion (Wave 1):
The initial upward move saw prices reach a bullish wave completion zone between 21,179 and 22,481. This zone represents the culmination of a strong impulsive wave, with consolidation occurring around the lower band (21,179) after peaking. The support held firm, indicating potential for further upside initially.
Extended Wave C or Wave 3 Profit Booking (Wave 2):
Following the bullish peak, an extended Wave C or Wave 3 profit-booking zone was identified between 22,086 and 22,636. This zone triggered a sharp decline as prices hit the upper band, suggesting overextension and exhaustion of bullish momentum. The drop broke below the support of this zone, setting the stage for a corrective phase.
Correction Wave (Wave 3):
A corrective wave formed, confirmed by a 50% Fibonacci retracement of the prior upward move. This retracement level acted as a natural pullback point, with prices stabilizing briefly before resuming their downward trajectory. This wave indicates a healthy correction within the larger trend.
Support and Further Correction (Wave 4):
Prices found temporary support within the correction wave zone of 22,758 - 23,054. However, this support failed, leading to a further decline after the formation of Wave 4 on a minor wave. The chart marks this as part of an extended correction wave completion zone (21,613 - 21,894), where current price action is converging.
Current Market Position and Outlook:
As of the chart's context (March 2023, with the current date being March 4, 2025), prices are trading toward the extended correction zone (21,613 - 21,894). This zone represents a critical level where buyers might step in, but a break below could signal deeper losses.
Short-term resistance is noted around 23,054, while a sustained move below 21,894 could target the Primary Wave 4 bottom at 19,683. This level aligns with a significant long-term support zone, making it a key area to watch for reversal or continuation.
Trading Implications:
Bullish Case: If prices hold above 21,894 and show signs of reversal (e.g., bullish candlestick patterns or increased volume), traders might anticipate a bounce toward 23,054.
Bearish Case: A break below 21,894 with strong momentum could open the door to 19,683, especially if broader market sentiment turns negative.
Risk management is crucial, with stop-losses recommended below key support levels and targets set near resistance zones.
