In our last video update we said that Nifty is probably in midst of a triangle formation and we expected some upside for Nifty. Here is the latest chart of Nifty:
Nifty has rallied quite a bit since (in line with our expectations) and is now trading between the important fibonacci retracement levels of 10704 and 10909. This could be an ideal zone for Nifty to complete the D leg of the rally. Accordingly we think that Nifty should probably commence the E leg of the correction soon.
The ideal target zone for E-leg fall will be between 10128-10266, which is between the 61.8% and 78.6% retracement level of D-leg. Once we complete this E-leg fall we should be ready for next leg of the rally.
The karnataka election results may prove to be an appropriate opportunity for market to perform such a whipsaw action (similar to what we have seen during BREXIT referendum, TRUMP election & Gujarat Election results). If we witness a fall as part of E-leg, it is very likely to bring extreme bearish sentiment with it. But, as long as we stay above the C leg low of 9952, we should see any bearish move as an E-leg fall in a larger running triangle formation which should be followed by the next leg of the rally towards all time highs for Nifty
Hence, any fall before or around Karnataka election results may be only seen as a probable opportunity to position yourself for the next leg of the uptrend,.
Important support levels for Nifty is 10519/10354 and ultimately the 10128-10266 zone.
Important resistance level is around 10910/11117.
