Our last update expected the market correction to gather steam on break of 9075 level on Nifty. However, this possibility was nullified on break of the crucial 9217 level as mentioned in our report. The break of this level has resulted in a major upswing and postponement of our anticipated correction. The updated elliott wave count for Nifty is shown below:
While we have shown in the chart that wave 3 was a 9-wave extension and probably ended around 9188. We cannot completely rule out the possibility that this may evolve into a 13-wave extension. Although presence of a running triangle as part of wave (viii) gives us confidence that wave 3 may not extend further (and might have already ended around 9188).
This analysis suggests we may be in wave 5 which may culminate into a major A-B-C correction. This wave 5 though may still attempt to post one more rally towards 9477-9500 zone. We anticipate some kind of correction to begin soon. An early indicator of this correction may be the break of the lower trend line shown in the chart above. The break of the trend line should indicate a move towards the crucial 9250-9275. Lack of support in this area (9250-9275) will signal a much sharper correction possibly towards 9075 levels. The price pattern formation of the correction will play an important role in determining the extent of correction. On the upside though if our analysis is correct, Nifty should find it tough to sustain above the upper trend line for very long, and the Nifty should begin some kind of a correction very soon.
As reiterated time & again, the long term story would remain in tact in spite of a sharp correction. The presence of an extension in wave 3 (shown above) only reinforces the view that we are in midst of a major long term up move. So there is nothing new to add from a long term perspective on Nifty for now.