Nifty Dow Reliance Dollar Analysis

Published: Mon, 10/26/20

Dear ,

If the recent market volatility has you awake then it was possible to see the US markets give up after a corrective rally as the following posts show. The US market did pick up early into October but then lost momentum as it often does ahead of previous elections. So the market now awaits a post election rally as both contestants promise more stimulus.

In the mean time Indian stocks appeared strong into this week even as Nifty made no apparent progress. This led to inter market divergences that we discussed with subscribers yesterday and is published below. These can warn of possible market turns.

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Rohit Srivastava

The Truth About the Markets

Dow Jones

US stocks continue to exhibit near term weakness as daily and weekly momentum is in sell mode. The rise ended in 3 waves and I quickly marked it as wave B. So it started as an election rally but has now been caught up in the usual pre-election blues. 28070 is the 20dma and if broken we may head toward 27200 near the 20 week average in wave C down for the DJI. [daily bars]

Dollar Index

This is the big picture of the Dollar index from the top made in March 2020. Wave 5 down progressing and subdividing and the important resistance level is near the moving averages at 93.50. Prices are in a larger downward channel for the 5 wave decline.

Midcaps and Banks diverge from Nifty

Inter market divergences can precede market turns, till the divergence is broken and we get a lead signal from one of the markets to drive the other. So Nifty rallied to new highs above the August top but Midcaps did not follow. They should have. But now in the short term as the pink line shows the new highs in the Midcap index [and bank nifty] above the Oct 12 high have not been confirmed by the Nifty. This short term divergence is a negative divergence till we surpass 12022. This keeps open the near term risk of a correction in Nifty.

Reliance Industries

RIL achieved the levels discussed last week for wave c down. What we need now is completing of a clear 5 wave decline in wave c before we can say that that the decline is done. Wave v of c may or may not be complete till confirmed. Hourly charts are very oversold, good for intraday bounces. The daily chart RSI just dipped below 30, so it is getting oversold but till we close positive minor wave v may still be forming, so let it complete. If this is wave 4 then we are near the bottom end of the range. If a 5 wave advance is over and this is going to get deeper then more subdivisions will occur. Watch the 40 hour average for early signs of a reversal of this trend. 2092 is the 20 hour average as the intraday resistance level.

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Rohit Srivastava
www.indiacharts.com
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