May 10, 2016

Neowave analysis for week starting 9th MAY

In the coming week, due to its oversold nature, we may watch if another contrary trade is possible, but on the +ve side.

If the post-Budget rally is indeed a “Diamond-Shaped” Diametric, then the upward g-leg can completely retrace the f-leg
 of fall, and achieve new heights for the rally.
However, since f-leg turned arithmetically “bigger” than the d-leg, it is possible that the post-Budget rally may be turning into a 9-legged Symmetrical Formation, similar to what we saw inside the 1st x-wave (or “B” wave of our alternate Expanding Triangle possibility).

As one can seen after higher highs till e-leg, the Symmetrical formation inside 1st x-wave showed lower highs for g & i legs

Symmetrical formation, as a result, can look like a “Rounding Top”
 similar to what we saw during Jul-Aug’15 last year. The last leg of this pattern would be i-leg, and the faster retracement of the last leg would confirm completion of the pattern.
If it indeed turns out to be a Symmetrical Formation, (instead of “Diamond-Shaped” Diametric), then 3 more legs, g-h-i, are pending. Thus, Symmetrical formation could stretch the end-point of the rally further.
Remember, the Symmetrical formation we saw earlier was from 15th Jun’15 to 20th Aug’15, i.e. it formed over 48 trading sessions. Against this, the current post-Budget rally has consumed 43 days. 
By our alternate Expanding Triangle (ET) assumption for the rally, the post-Budget rally is considered as “D” of ET. The “D” leg is already “bigger” than “B” leg price-wise. Ideally, it should be “bigger” time-wise as well.
Therefore, if it indeed turns out to be a Symmetrical formation, then we cannot rule out the rally would end only after 13thMay’16, after achieving “larger” time as compared to the “B” leg.
In case Index fails to open the much-expected g-leg in the fresh week, then we may assume f-leg is still developing. Remember, in Jul’15 last year, the f-leg had completely retraced the e-leg.


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