January 16, 2017

Neowave outlook of markets

The bottoms made during Nov-Dec’16 were similar, i.e. 25718 & 25754 (7916 & 7894 on Nifty), and therefore, they looked like a “Double Bottom”, which is a reversal formation as per conventional Technical Analysis.

The high between these 2 bottoms, i.e. high of 9th Dec at 26804 (Nifty 8275), was crossed in Jan’16, which is a conventional method to confirm a “Double Bottom”. The height of such a Double Bottom can be projected as possible upside, and same would also calculate to levels similar to 27800 (Nifty 8560), close to the 61.8% level marked on the charts.

The 61.8% level is also close to Neckline of Head & Shoulder formation we had marked as Sep’16 top reversal formation. Index, remember, broke this Neckline in Nov’16, and achieved downside projected on the basis of height of the H&S formation.

The 61.8% level is also close to the high of 10th Nov’16 at 27743 (Nifty 8598), where Index went into a huge “Turmoil” immediately after the Trump Victory and Demonetization. Remember, Index lost 1685 pts overnight on these news flows, recovered 1835 pts by 10th Nov, only to drop to a new low thereafter.

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