Nifty has invalidated our high probability wave count and is now developing into the 5th leg as per our second most likely scenario outlined in our last post. This doesn’t affect our long term analysis (and bullish outlook) as the prices continue to stay in a channel since the price fall from 9100 levels. But in the short term this implies we may see further selling. We have outlined our long term channel and the wave count for the probable last leg of the long term correction.
As per our this wave count we expect Nifty to head for test of the 1-3 trend line (labeled T1). The price action in the coming days may see either a throwover and pull back develop around the line T1 or may fall short of reaching this line and develop as a truncated wave. In either case the next bullish move would be confirmed only on break of the 2-4 line (labelled T2). It is important for prices to take support around this region as we see that our long term trend channel and the Modi Era Support Range lower end support around (7110-7130) are coinciding in this region. If the price fall from march of 2015 is a correction, the prices should not be able to sustain long below a region that has confluence of support from multiple sources ( ending diagonal pattern, long term corrective trend channel, and modi era support range).