Last 9 sessions sharp down moves are not technically based but only on the back of following news:-
1- 2 most depressing weekly inflation data.
2- Sharply declined IIP data.
3- Below expectations INFY quarterly results.
4- Disappointing monthly inflation data last Friday.
Nifty is trading within 5690-6339 for the last 4 months and Nifty got support at its lowest 3 times earlier but broken down and closed below it last Friday after rising monthly inflation data and tested 200-Day EMA as well. No distribution pattern but "Falling Channel" formation is seen in last 4 months EOD chart. It is continuation pattern and it means that on going up trend will remain continued. Wave 3 trend line has not breached also therefore up trend is still intact.
Waves Structure and continution Patterns in Daily Chart:-
Intermediate and short term trends are down. Although Nifty tested 200-Day EMA but closed above it last Friday therefore long term trend is still up. Wave 3 is very much on at this moment and it has tested 200-Day EMA earlier since its begining on 13-07-2009 in intermediate term corrections and Nifty tested 3rd time in on going up move. It is the nature of bull ralies that prices are tend to test 200-Day EMA in corrections and until Nifty will not sustain below it till then Wave 3 will remain on and primary trend will remin up.
It is the nature of bull markets intermediate term correction that:-
1- Prices may hover around 200-Day EMA for few sessions.
2- Prices may dip below or also close 1/2 sessions below 200-Day EMA.
but long term trend will remain up Until:-
1- Nifty will not sustain below 200-Day EMA minimum 3 sessions
2- Nifty will not dip more than 3% down from 200-Day EMA
3- Nifty will not break down 200-Day EMA by force.
200-Day EMA is today at 5648 and should be watched first for mext moves confirmations. Although Indian markets slipped from higher levels but distribution patterns are not seen on intraday,daily and weekly charts therefore on going down moves are only the result of extremely high inflation and RBI rates hike fear.
Conclusions
As down moves are not the result of distribution patterns therefore does not require much consolidations before any rally and sharp V-shaped recovery possibility can not be ruled out. 200-Day EMA is next trend decider therefore will be watched first for next moves confirmations but expected that finally Nifty will sustain above and fresh rally will be seen within couple of weeks.