Nifty – Markets are still correcting, though the 4th minor wave MAY have been completed. However, there is still room for the 4th wave to go down a bit as shown above with the orange rectangle.
The main trend is up and the present up-down movements are to be seen as part of the COMPLETING 4th wave in a flat correction.
Once this 4th wave is completed, markets will resume the bull run.
NIFTY – INTERESTING FACTS ABOUT 4TH WAVES AND FLAT CORRECTION
Nifty – Flat corrections as the name suggests, end where they started from. It is a common occurrence when the markets have moved in one direction in a fast-paced manner. It can be likened to the skidding of a car when SUDDEN brakes are applied in a moving vehicle.
To understand why flat corrections occur MOSTLY in 4th waves one must first understand the underlying psychology behind the principles of elliot wave theory.
ELLIOT WAVE THEORY, IN A NUTSHELL, is all about market participants moving in waves of optimism and pessimism, creating patterns that can be identified and analyzed.
The 3rd waves are the strongest as per the elliot wave theory. A flat correction mostly occurs at the end of the 3rd wave creating a sort of pause. This pause can create a sense of uncertainty among traders and investors.
PSYCHOLOGICALLY, this pause creates CONFLICTING emotions and actions among the market participants. Traders who missed out earlier on this rise may jump in while some traders who were already in may book profits.
THIS TEMPORARY EQUILIBRIUM leads to a flat correction.
WHAT THIS MEANS
In all probability bull run is intact . Presently we are onto the last leg of the flat correction moving down which MAY OR MAY NOT HAVE FINISHED. This last leg when it finishes (may or may not test the 19300 mark), the bull run will be resumed in earnest.