July 24, 2017

Neowave outlook of market

For the fresh week, we may watch if “b” leg remains a sub-standard development, and develops as a Triangle or Double Failure Flat, and whether an upward “c” leg opens, looking like a breakout from the sub-standard “b” leg.

Friday’s action comprised of an extremely volatile, 628-pt up-down movement intra-day. Sensex initially gained 131 pts, only to lose 253 pts after 10:15. However, the 245-pt recovery in the 2nd half, on the shoulders of 3.7% gain on Reliance, resulted in Sensex finishing +ve.

Such extreme volatility suggested that Bulls and Bears are fighting a battle at Tuesday’s gap-down area. Friday’s initial dip, which protected Tuesday’s low of 31626, is marked c-leg inside “b” and Friday’s late recovery could be d-leg if “b” forms into a Triangle.

With c < a and d < b, the up-down legs of last week showed “contraction”, supporting our theory that “b” of 3rd may develop as a “Triangle”. If recovery turns bigger than b-leg, & hits a new high, then “b” of 3rd can turn into Double Failure Flat.

The e-leg in a Triangle would the “smallest” leg and, faster retracement of the e-leg would confirm “b” of 3rd completing as Triangle.

Breakout from “b” of 3rd should break its starting point, which means, crossing Friday’s high could open “c” of 3rd to reach a new high.

Read more at http://content.icicidirect.com/ULFiles/UploadFile_2017724105811.asp

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