Nifty Elliott Wave Update

Explanatory Note: Wave 5 is subdividing into 5 waves and wave iii of 5 is going on.

Wave iii of 5 points to 17500-17600, and the monthly band is at 17383. The blue trendline support from the April low is at 15974 as the closest trailing level for the trend. All trend indicators are bullish except that volumes have still not picked up meaningfully. Margin rules have been blamed for that so far. The RSI is at 72 but it can keep rising toward 78 or more till we complete 5 waves inside wave 5. In the end, we may even see a negative divergence before a final top. We are not there yet.

Bank Nifty has held the 20-week average art 34472, till it holds we can retain the bullish outlook. The sideways trading range will break on the upside on a close above 36180. After that, the upper band is the next resistance at 37135. In terms of wave structure, I discussed the below marking a few weeks ago in WWIC, take the 4th wave as a diamond triangle and wave 5 only starts from the recent low of 34115 in July. This makes sense because all the up and down moves from April to July are corrective [meaning a series of 3 waves up or down]. This also allows us to align the wave count on nifty with bank nifty. Will stick with this till new evidence comes up.

Copper

With the completion of the pullback cycle in the weekly momentum indicator and copper bouncing back from the 40WEMA and the weekly lower Bollinger band, it looks like wave 2 is complete and wave 3 has started. A breakout from the channel, which is currently pegged at $4.53, will be a futher confirmation that wave 3 is unfolding. A break above the channel gives the range of $5.15 - $5.25 on the upside. Copper is expected to rise higher towards this zone once its closes above $4.53. On the way down, the 40WEMA of $4.11 will now be a crucial support level to watch out for in the forthcoming trading sessions.

Nikkei

The Nikkei index has possibly completed the complex correction pattern by breaking out from a wedge pattern in wave (Z). In addition to this, the Nikkei index is now trading above the key daily averages. On the way up, the next and the final hurdle for the Nikkei index is the upper end of the downward sloping channel which is currently pegged at 28760. The bulls will be back in action once this hurdle is crossed on the closing basis. As wave 5 unfolds, it can initially re-test the high of wave 3 of 30714. On the way down, the 40DEMA and the 20DMA, which are currently pegged at 27913 and 27688 will be providing support in the near term.

AUDUSD

AUD/USD has seen a five rise from the low after completing a complex correction in the form of W-X-Y-X-Z. This would mean that the correction in larger wave degree wave 2 is over and the pair is now possibly headed higher in the days to come. The bulls will gain strength once the pair starts trading above the 40DEMA which is currently pegged at 0.7354. On the way down, 0.7106 will now be a major support level to watch out for.

Nickel

Since May 2021, Nickel is moving higher in a rising channel. In today's trading session, Nickel has broken out from the near-term falling channel with a gap. Nickel is possibly headed higher towards the upper end of the rising channel which is currently pegged at 20740. The 20DMA and the 40DEMA are currently pegged at 19127 and 19127 respectively. On the way down, both the key averages will provide support in case of any correction/pullback.

USDINR bear market resumes

USDINR has pushed my wave count back and forth and so again we go back to this. The recent decline has pushed the weekly momentum into sell mode and we closed below both the weekly moving averages. So that takes us to the monthly chart below that closed for the month. Like in May when we closed below the red dotted 20mma and bounced back we are again below the 20mma. This back and forth has happened every time the market has rallied [meaning Nifty]. Now what I have done below is something that I first observed in currency markets making long-term reversal levels. After wave E of an ending pattern, wave E itself becomes a long time-consuming triangle. This causes ample confusion along the way. But once complete we get a strong trend. In this case, the USDINR topping process after a 5 wave rise has been a one-year-long turmoil. But it should finally be the nail in the coffin. USDINR should move more swiftly to the downside. The short-term RSI is at 22 so do not rule out a one-day bounce here and there but the trend is down. The lower line of the triangle is at 72.47 and once we close below that we are set to go toward 68.27 next.