NIFTY – Are We Heading Towards 5900 or Is It Too Early To Go Short

Nifty has seen a rise of more than 34% from the low of 5108.25 made in August 2013. Currently, Nifty is in uptrend where the pivot low is around 6460. But the recent formation in Nifty can be marked as a bearish Wolf wave which signals the down move till 5920-5950 levels where there are previous support areas, but this pattern will look valid only if Nifty closes below 6630 level and sustains below that level for at least 2-3 trading sessions. 

All the long positions must keep their strict stop losses below 6460 after which markets may see a sudden down move. The Lok Sabha elections will have major impact on the Index the results of which are to be announced on May 16 2014.

The pattern may work or may not work but this is one bearish signal which seems to me stronger than some positive news. We never know who wins or who losses but markets behave according to the technicals. 

If one creates short positions then stop losses of current highs of 6900 in Nifty futures should be used. This view is only valid if Nifty future closes below 6630 on daily charts.

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