August 28, 2017

Neowave outlook of markets

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However, if c-leg fails to cross above a-leg, i.e. 17th Aug high of 31938 (Nifty 9948), then it could finish off as a “C-failure Flat”, which could carry more severe downside implication as compared to a “Common Flat”.

Once “b” is completed, a downward “c” leg would open. What kind of pattern ultimately develops inside “b” leg could be crucial from the medium-to-long-term perspective of the market.

As for the long-term perspective, last week we mentioned that in the year ‘2017, Index is on VP’s 2-year Cycle of Tops. This week, we are showing below the Monthly chart of Sensex with major top formation every 2 years since ‘1992.

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Broadly, however, we’ve argued there are 3 categories of corrections from the top-most value every 2 years (a) 12-13% (b) 25-30% (c) 50-60%.

As we mentioned last week, if the Sensex loses even 12-13% from this year’s high of 30686, it would project downsides closer to 28000-29000 (Nifty 8900-9000).

We had also mentioned that Sensex 28000-29000 (Nifty 8900-9000) level would also be closer to NEoWave “pattern implication” of 60-70% retracement of the Triple Diametric development from Dec’16 to Aug’17.

We also said, this projection would take Sensex closer to lower end of the larger Green channel shown on the following chart. The level would also be closer to VP’s next lower Grid at 30050 & top of ‘2015.

Read more at http://content.icicidirect.com/ULFiles/UploadFile_201782811827.asp

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