Nifty continues to make a predictable pattern, please refer to chart as you keep reading notes
During Downtrend,
1. Straight line downfall without retracement
2. Inverted U - Shape gets formed more than once
3. Finally Consolidation Phase seen
4. Starts to show uptrend
During Uptrend,
1. Inverted U shape does not occur
2. Uptrend shows up without retracement
3. Consolidation phase seen
4. Final uptrend shows sharp rise before the next fall
Nifty Notes :
1. From Oct 28th to Nov 24th sharp downfall observed, after which from Nov 25th to Dec 20th an inverted U-shape gets formed
2. Another cycle of inverted U-shape continues to go on from Dec 21st to Jan 2nd
3. U-shape seen to be stopped, but a consolidation phase appears from Jan 3rd to Jan 9th
4. From a consolidation phase Nifty starts on a new uptrend from Jan 10 to Feb 21
5. From Feb 22nd to Apr 23rd, 6 phases of inverted U-shape appears (marked as 1 to 6 in the chart)
6. As expected post that inverted U-shape stops but then a steady downfall trend starts from May 3rd to May 18th
7. Nifty then goes on to makes two sets of Inverted U-shape between May 21st & Jan 4th
8. As a confirmation of downtrend stopping, Nifty makes a consolidation between Jun 7th to Jun 15th
So what do I expect to happen next?
According to my research on pattern & trend study, I expect the following to happen
1. It is seen for many years that Nifty after making a inverted U-shape makes a consolidation phase
2. However million dollar question is after consolidation one of these events can happen either a sharp downfall or a steady increase
3. Looking at Nifty Chart, around 5045 to 5050 Nifty has got strong support level, with next support level around 5080. If Nifty touches 5050 by Mon then it is a confirmation that another sharp decline is expected for many more trading sessions
4. However for downfall to happen Nifty has to cross downwards 5080 - 5050, and I assign 30% probability for that
5. What I believe is going to happen is Nifty will make a sharp increase for the next few trading sessions
6. I assume that the sharp increase will stop around 5200 to 5300 levels
7. However after 5300 if Nifty continues to get another consolidation phase then it may start a new uptrend and go upto 5400 to 5500. Now I strongly believe with 90% probability that it is not going to happen
8. Nifty will give us a sharp decline from 5200 to 5300 level onwards and this time the sharp decline will go below 4800 and even to 4650 to 4700 levels
From charts we can also infer the following
1. Usually if Nifty makes a final uptrend, that will always be a very steep and quick one, it shows the psychology of investors that they feel that prices have to be increased quickly and then sell it immediately, because of huge profit taking trend starts to reverse and we start seeing a sharp downfall
2. Consolidation phase is always not a bad thing, it is not always a bearish one, it depends on when it happens
3. Pattern should be clearly understood for this, first a straight downfall should happen, then an inverted U-phase more than once will happen and then finally consolidation phase begins. Now do not hurry and buy immediately wait for an uptrend to show up after consolidation stops and then go long it will be both rewarding and less risky
I had been long on SBI for couple of trading sessions and finally sold 90% of it to booked profits by Fri as Mon is a major news event day. Usually news events decide uptrend or downtrend hence I do not want to be long without technically seeing the outcome
Even though I'm confident that an uptrend is visible, I do not want to take risks by speculating. Technically trend is up and If Nifty crosses 5150 I'll again add fresh longs and stay invested
For any questions, comments, feedbacks please write to me at researchstockmarket@gmail.com and you can see me in twitter as well my twitter id is analyzestock
Summary
5050 acts as support with 5150 acting as resistance, if 5150 gets taken off just go long immediately and I expect Nifty to go to 5200 to 5300 in couple of trading sessions starting taking profits partially at different levels take it out in 3 phases, once 5200 gets crossed then finally exit close to 5300 by taking complete profits
Sectors to invest - In this uptrend rally Bank Nifty looks very strong and has formed a "W" pattern in almost all major Private & Public banks including the index as well and some of them have already started to show a slight breakout pattern on the positive side
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