Our previous analysis of the Indian Nifty 50 stock market index was published over seven months ago. On October 7th, 2016, the index was hovering slightly below 8700 and since the uptrend was still in progress, we thought a new all-time high should eventually be expected somewhere near 9200.
Prices climbed to as high as 9 532 at one point this week, so it seems to be a good time to take another look at the charts and see what is left of Nifty 50’s rally and how high could the bulls take it.
Last time, the Elliott Wave Principle suggested the index was advancing in wave V of (V). It still does. The main difference is in the length of this fifth wave, which appears to be extending into a full five-wave impulse now. This means that the Nifty 50 is likely going to approach the upper line of the trend channel. In terms of price, it is probably going to reach the 10 000 mark from now on. Maybe even 10 500.
Once wave V is complete, on the other hand, the entire five-wave sequence from the bottom at 2252 in October 2008 would be over. According to the theory, every impulse is followed by a correction of three waves in the opposite direction. So, instead of joining the bulls above 10 000, investors would be better off staying on the sidelines, because a major correction would be just around the corner. The end of wave V would give the start of a decline towards the resistance of wave IV near 6800. Possibly even lower.