04 Feb 2017

RETAIL RESEARCH
Weekly Technical Report

Weekly Technical Report

A chart speaks one thousand words

10000 B.C.(Bullish Confirmation for Nifty target of 10000)

Technical Research Analyst: Gajendra Prabu

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

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Nifty [CMP-8740.95]

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

Weeks action formed a strong bull candle with good volumes which indicates bulls are continuing their momentum.

Index has formed a five wave advance which is a bullish formation and the rise from 7893 has five wave internals. Up to last week we had three waves but end of this
week has clear five waves which is an impulse; so index has canceled out the all larger bearish expectations and has turned bullish for the target of 10,000 before end
of 2017. However dont be in hurry - wait for minimum 300 points correction for buying. In case no such correction comes, then buy on crossing of 8883. [In the
bigger picture we are going to be neutral from the current high of 8673 to 8808 band as 8808 is our major resistance in medium term perspective. Make note we
have been maintaining bullish bias in the bigger picture from 7950 levels and played till 8550 i.e. almost 600 points. Now for the next another 130 points or so, we
do not recommend any big long positions. However in short term we are maintaining bullish stance until we see sharp selloff or breakdown of rising channel current
level of which is 8450.]

Index has been forming an impulse from the low of 7893, this week price has added another 3 and 5 waves to the earlier zigzag (5-3-5); so now we have 5-3-5-3-5 which
is a clear impulse.

Price has been continuously forming higher tops and higher bottoms on daily chart which is a bullish continuation structure and this is a bullish dow formation.

Price is rising in a channel; this shows the strength of the bulls but now it is facing resistance at the upper trendline so maintain mildly bullish stance; any time it could
give up (see page no 5).

RSI oscillator also shows some mild negative divergence which hints there may be a correction (See page no 5).

It is very difficult to say the exact level for top but we have a clue that index could see a minimum 300 points correction before crossing above 8883.

The level of 8883 is 100% of wave iii; as per theory wave iii is never the shortest among the impulse (five waves) and wave I is already larger than wave iii; so
wave v should be shorter that wave iii.

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. Investors book partial profits and wait for dips to buy again for the long term target of 10,000 levels.

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.

Nifty has added two more legs to the

pervious zigzag which has changed
the count structure from 3 waves to 5
wave

So the move from the low of 7,893 to

current levels is major wave i of iii
which has clear 1-2-3-4-5.

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
8672 is wave iii and the fall from
8672 to 8537 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 i.e.
retracement of last rise; currently
38.2% retracement level is placed at
8450 levels.

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Nifty RSI Divergence Nifty Challenge

The above chart shows the negative divergence in RSI oscillator. The above chart shows the price is moving in rising channel.

Price has made a higher high after the high of 8672 but oscillator didnt make In the past index turned down when it hit the upper trendline; now again it is
the higher high which called negative divergence. testing the upper trendline

This could lead to a short term correction.

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