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13 Jan 2017

RETAIL RESEARCH
Weekly Technical Report

Weekly Technical Report


A chart speaks one thousand words

Kissed the Second Target

Technical Research Analyst: Gajendra Prabu


E-Mail: (gajendra.prabu@hdfcsec.com)

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Nifty [CMP-8400.35]

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Observations: [Earlier Indications are in Italics & All levels are in Nifty Spot/Cash]

Weeks action formed a strong bull candle with good volumes which indicates bulls are strongly continuing their momentum.

Index has attained our second target of 8450 without providing significant downward retracement. We were expecting this rise in second half of the week but index
breached the channel setup on Wednesday which has cancelled out the minor downward retracement. [Index has started to retrace (upward) the last fall started
from 8978 to 7983, the golden retracement levels of 38.2%, 50% and 61.8% levels are placed at 8300 8450 - 8550 levels respectively. Traders can maintain positive
bias for the upside targets of 8300 8450 - 8550 levels in next couple of weeks.]

Index moved up without any significant correction; so if bulls give up then we could see sharp decline before the next rise.

Index has formed a higher top formation in weekly chart which is beginning of bullish continuation structure but on daily charts index has been forming higher top and
higher bottoms which has already confirmed bullish continuation formation.

Bulls took a halt for a day around 200 day EMA then it jumped above the 200 Day EMA and is trading above it which is a positive sign for bulls.

Like we discussed earlier, index has been forming zigzag pattern from the low of 7893. The internal wave b was not even 23.6% of wave a (This is extremely rare
scenario) and wave c has almost tested the 61.8% projection levels of wave a&b which is placed at 8480.

There is strong support placed at 8340, if index closes below this level then we could see little deeper correction towards 8100 levels. However as long as index trades
above this level, our upside third target of 8550 is open. Watch out the Gap resistance in the band of 8460 to 8510 levels.

The current rise is a zigzag (three wave) so the next fall could move below 61.8% of the last rise or index could give up and move all the way to 7893 levels (Because we
said earlier index is in upward retracement not a fresh rally). At this point we dont know whether expected upward retracement has ended in this leg itself or index is
forming a larger flat pattern (in this case index could slide down to 8100 then again one more up to 8550 or higher), we need more price development to confirm.

Overall traders can maintain positive bias as long as index trades above 8340 levels for the target of 8550. On a close below 8340 turn to negative for the target of
8100 levels with the stoploss of 8460 or high of the week whichever is higher at the time of breakdown.

As per our preferred wave count: Decline from the high of 9119 to 7940 is marked as major wave a .The three wave upward rise from 7940 to 8655 is marked as
major wave b and the major wave c has started from 8655 ended at 7539. This a-b-c is 1st corrective and the rise from 7539 to 8336 is marked as wave x. Then
the 2nd corrective has started from 8336. In this wave a has started from 8336 to 7714. The rise from 7714 to 7979 is wave b. The last falling leg wave c has
started from 7979 ended at 6825 with minor wave i & iv overlap. And now we are in progress of wave x which has started from 6825 level. The wave x is a rising
wedge pattern. As per our preferred count Cycle degree wave iii/C has ended at 238.2% projection level of wave i/A & wave ii/B. The cycle degree wave i/A
started from 4531 level and ended at 6229 and wave ii/B started from 6229 and ended at 5118. The dynamic wave iii/C started from 5118 and ended at 9119 with
a couple of extensions. And now index is in progress of cycle degree wave iv/X down.

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Nifty Internals

The daily chart of Nifty shows internal


count structure.

From the low of 7893 index has been


forming a zigzag pattern which is a
three wave pattern i.e. a-b-c.

A five wave advance has ended at


8306. The rise from 7983 to 8306 is
an impulse marked as wave a.

The small fall from 8306 to 8227 is


market as wave b. The current rise
from 8227 is wave c which is still in
progress.

Index has retraced 50% of the last


major falling leg.

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"HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475."

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