Nifty has continued to rally in line with the alternate scenario we outlined in our last post. The gap area of 11185-11210 proved to be decisive in keeping us on the right side of the markets and prevented us from getting bearish in anticipation of our base count outlook at the time.
Since then Nifty has rallied without any major corrections until recently. This rally has been an extended wave (iii) which has resolved into a wave (iv):
Such extended wave (iii) are often followed by a tepid wave (v) which are often truncated. In current scenario it seems that Nifty is likely to go through a period of choppy behavior for quite a few trading sessions as it completes wave (v) of 3 followed by a wave 4 & wave 5 (as part of III) before heading for a deeper wave IV correction of similar magnitude to wave II.
Overall this implies a broadly range bound movement (may be even for the next 25-30 trading sessions) before we see a good rally (similar to wave I) that takes Nifty to the 12000 peak.
I have also marked a higher degree alternate (A-B-C) count that we may take into consideration after seeing the price action following end of wave 5
Conclusion: Expect Nifty to go through a choppy broadly range bound behavior for some time before next major leg of the rally.
