Nifty: Sell @ CMP 8,300| Stop @ 8,660 | Target @ 7,477 — 7,025 — 6,750
Nifty May Fall Further To 7500 And Below Level Soon If 8660 Holds
The daily technical chart of Nifty 50 August contract shows ABC Pattern formation. Nifty dropped from 9119 (Point A) seen in May to the low of 7940 (Point B) at the mid-July. Prices rebounded from the low of 7940 and rose to 8655, which was exactly 61.8% retracement of the fall from Point A to Point B.
Currently, the contract closed at 8299, where further correction in prices is expected to continue. Initial support will be seen at 7940 which was the recent bottom and further selling will continue after crossing the same.
The difference between Point A and Point B is 1,179 points (9119-7940). As per the Fibonacci Expansion Theory, calculating the same distance from 8655 (Point C) will bring the target to 7477 (8655-1179) on the lower side. Thereafter, the next target could be 6750 considering 161.80% on the same Expansion Theory from Point C.
However, if Nifty 50 reverts from the current level of 8,300 and trades above 8,655 then the target on higher side would be 8900, which is the recent top. If it sustains above 8900 then contract could rise further to 9119, which is the all time high of the market.
The ‘External’ criteria which will support the down fall include: Depreciating Rupee against the Dollar, and issues with the emerging market currencies. Global equity markets under severe pressure.
