So "if " Nifty is playing out the "triangle" after the fall to 2253, it is in its "e" or the final segment of that triangle. How far this "e" wave can go is not certain. So a channeling of this up move from the low of 2662 should help in reversing the trade.
And there are those who feels that the 4th wave ended at 3147 as a "Flat - abc" and the 5th wave down has started with its first fall ended at 2662 and the second up is on and poised to move down in its 3rd down...confirmation of the same will be a fall below 2775 or 2662.
And then there is another view from "Mr.Vivek Patil's" last week write up where in he has hinted at the last leg("g") up of a "Bow Tie Diametric" scenario as a "X" wave after which the last fall to happen. He has also detailed on various other possibilities which require further confirmations of future price movements.
He states furthermore as below:
As I already mentioned, “Once the “x” gets over, the 3rd corrective would preferably develop as a Triangle. The ‘a’ leg of a Triangle is usually a violent action, which would threaten the low of 7697 made in Oct, creating the lowest value, preferably near 6150-6500 as the final sell-off of the bear phase. Remaining legs of the ending Triangle, b,c,d,e, would appears as a sideways basing action to complete the Triple Combination from ‘Jan high of 21206.”
This, I said, “would support the theory that some kind of catastrophic event would be seen in the 3rd corrective, creating the lowest value. Creation of a permanent bottom value needs such an event, and is simply a matter of history of the stock market at least during the previous two bear cycles I know of.”
I had said, “ending ‘x’, in effect, would mean that such a catastrophic event can occur within the next 5-10 days, whereas, the Diametric scenario, with ‘g’ leg developing upwards/sideways (as ending leg of ‘x’) before the big fall, is a way to postpone such event to a future date, probably to the end of ‘Feb-09.”
As I said, “‘g’ leg would be the last effort to protect ‘Oct lows, which can preferably develop in a failure wave appearing as a sideways consolidation.” Clarity on whether "x" is still forming as Diametric or is over at 10470 would be expected in the next week or two.
Following is his commentary on a monthly scale:-
“Triple Combination can occur only as the largest leg of a Triangle (or Terminal). Therefore, the fall from ‘Jan highs is likely to be the “a” or first leg of the larger Triangle.”
A Triangle always has exactly five legs, to be marked as a-b-c-d-e. Once “a” of Triangle is over, configuring as a Triple Combination, “b” leg should move higher to about 50% of “a” leg. Of the four retracing legs of a Triangle, 3 out of 4 should retrace at least 50% of their respective previous legs. Since “a” leg would have consumed about 13 months since Jan’08, the entire Triangle, consisting of five legs, could consume 3 to 5 years.
I had, accordingly, targeted sub-10k levels for Sensex price-wise, and a minimum of 13 months into bear phase time-wise. Though the price targets have been achieved, the time targets are yet to be achieved. Remember, in technical analysis, both time and price forecasts must be achieved. Long-term investors should, therefore, wait till then. As long as Sensex keeps on making lower highs, the bear phase continues.
Besides price \ time damage, I have been mentioning scam as a usual occurrence after 8-year cycle top. In the current cycle, this may have, or will unfold further in the Global financial markets. The size of the figures will, therefore, be much larger than the earlier ones, and so will be the number of people involved in it.
Furthermore, the history shows that the bull always goes to jail. (Raju did).
Another parameter that leads to the actual lowest value of the bear cycle is the catastrophic event. Such event would be a terrible disaster or accident, especially the one that leads to a great loss of life. The last two cycles had seen terrorist activities, serial blast in Mumbai during ‘1993 and WTC tower collapse during ‘2001.
These events happen suddenly, without any warning, and their catastrophic proportions are not known even while they are happening. During ‘1993, one blast would have been normal, but 13 serially proved catastrophic. During ‘2001, 1st hit could have been an accident, but two in succession was catastrophic.
These events led to such desperation that the lows created thereafter were never ever broken again, Sensex low of 1980 during ‘1993 and 2584 during ‘2001.
Ironically, therefore, such events did, and will provide the best of the investment opportunity to an investor, who is able to take it when it comes. If so, we could be on watch, from now till whenever it occurs. Perhaps, the 13th month, i.e. February’2009 could be the focused time zone.
With last week’s accounting scam from Satyam, one more parameter of bear market has unfolded as was argued for. The last remaining parameter would the catastrophic event, which we are waiting for. At 8600/7700, having seen the required 62% cut from high of 21206, we need such an event to take the Index lower, in which case, I am expecting 6150-6500 to be the lower target.
