On the 31st of May we had discussed the pattern formation of the second wave - the wave so far does look like it was broken into 3 sub waves. On 16th of June we hit an intraday low of 5389.8 Combining the symmetrical triangle and trendlines a low of 5365 could be very much possible. We are now looking at the formation of the 6th wave to form the symmetrical triangle pattern.
IMPORTANT
One should observe very carefully how the market behaves at the 5330-50 levels. Short or Long positions should be taken with strict stop loss. If the market closes under the trendline a move upto 5700 levels may come into question.
The coming wave or the 3rd wave (3) of the B wave shall be composed of a 5 wave structure. 3 upwaves and 2 down/corrective waves. Overall in our view the 3rd wave shall hit a high of 5690 -5710. and start at the low of 5360-65
While analyzing the Fibonacci retracement levels taking the high of 5944.45 on the 6th of April and low of 5328.7 on the 25th of May we see that the NIFTY retraced back to 5563 or 38.2% and retraced back down to 5473 or the 23.6% levels. The retracement can be seen upto a level of 5709 or 61.8%
We would advise investors to clear all long positions and watch carefully how the market acts at this level.
RBI today hiked the bank rates by 25bps and analysts assume another rate hike of upto 75 bps within the coming year. We are amidst the Greek and Euro debt crisis, Inflation and America adapting quantitative policies to reduce its 14 trillion dollar debt which makes the global markets less attractive and investors more wary.
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