20 Feb 2017

RETAIL RESEARCH
Weekly Technical Report

Weekly Technical Report

A chart speaks one thousand words

Support at 8715

Technical Research Analyst: Gajendra Prabu

E-Mail: (gajendra.prabu@hdfcsec.com)

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Nifty [CMP-8821.70]

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Observations: [Earlier Indications are in Italics & All levels are in Nifty Spot/Cash]

Weeks action formed another doji candle at the resistance zone which is bearish reversal formation, however the pattern could get validated when index breaks below
8715 levels.

The index has started showing weakness consecutively for the second week. Though it was a positive close compared with last week but the gain doesnt show any
significant strength on chart (Doji Formation). [Overall traders can maintain neutral stance as long as index trades below 8883 and wait for the correction of
minimum 300 points correction for buying opportunity.]

Two consecutive dojis indicates that something is cooking majorly in the index, the current scenario seems like a tug of war between bulls and bears. Also index is
trading near to the support; any breakdown could lead to minor correction.

Price is near to the 2-4 trendline; current value is placed at 8750 levels but we keep the trigger at 8715 for clear trend reversal. As long as index trades above this level it
could continuously move sideways or form minor higher tops and higher bottoms.

If index breaks below 2-4 trendline and moves below 8715 then we could confirm that the current rising leg has ended and it has started to retrace the last rise. The
38.2% and 50% levels are placed around 8520 8400 levels. In simple terms, on a fall below 8715 it could slide down to 8520 8400 levels in forthcoming weeks.

The bullish continuation structure i.e. higher tops and higher bottoms is continuing in both daily and weekly charts which keeps uptrend intact.

Index has reached the overbought zone in RSI oscillator which hints that there may not be big upside before we see decent correction.

Minor negative divergence has been witnessed in RSI which may resist the bulls to move up further, also there is a chance that this divergence could cancel out if index
does not give up.

Overall traders can maintain mildly positive or neutral stance as long as index trades above 8715 for the target of 8883 8900 and if any break below 8715 then we
could see correction for the downside targets of 8520 - 8400.

As per our preferred wave count: Cycle degree wave i has started from 4531 level and ended at 6229. The wave ii has started from 6229 and ended at 5118. The
dynamic wave iii has started from 5118 and ended at 9119 with a couple of extensions. The larger fall from 9119 to 6825 was cycle degree wave iv down. Now we
are in cycle degree wave v which is heading towards 10,000 mark. Earlier the rise from 6825 to 8968 has five wave advance but we labeled as a-b-c-d-e as we had
not seen clear impulse in the 1st leg, but now again there is another five wave advance in the rising leg; so we have to assume there might be some missing wave in the
1st leg of previous rising leg, however it is also having five wave advance. Now we are labeling that as 1-2-3-4-5 instead of a-b-c-d-e. Likewise we kept the alternate of
wave x/iv for the cycle degree fall started from 9119, now we have confirmed that the end of 6825 is cycle degree wave iv and cycle degree wave v is in progress
in which the rise from 6825 to 8968 is major wave i and the fall from 8968 to 7893 is major wave ii now Nifty is in progress of dynamic major wave iii.

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Nifty Internals

The daily chart of Nifty shows internal

count structure.

Index found support at the previous

minor swing support of 8715 and
rebounded from there which
suggested us to redraw the 2-4
trendline; also make minor changes
in the internal swings.

The changes are: earlier we have

completed the wave iii at 8672 now
it has shifted to 8827. Previously
wave iv was marked at 8537 which
has now shifted to 8715.

Now the current value of 2-4

trendline is placed at 8750.

If index starts correcting then it could

test the golden retracement levels of
38.2% and 50% of last rise which are
placed around 8520 8400 levels.

The rise from 7893 to 8461 is wave

i and the fall from 8461 to 8327 is
wave ii then the rise from 8327 to
8827 is wave iii and the fall from
8827 to 8715 is wave iv. Finally
now we are in wave v which is last
rising leg of the current rising
segment.

When the fifth wave ends, we could

see a short term correction.

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