Nifty Long Term Trend with Volume Profile

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Nifty has been moving with high volatility and is in sell on rise mode so far. Volume profile along with Elliott wave – Neo wave giving clear view from short term to long term perspective.

Below research shows where do we stand as of now and why 16740 is important support from medium term perspective.

Nifty weekly chart is picked up from “The Financial Waves Monthly update”

Nifty weekly chart:

Nifty Volume profile:

Neo wave perspective: In the year of 2020, prices completed long corrective phase in form of Diametric pattern in primary wave [4] and post that it has showed rally from 7511 to 18604 level which suggest that primary wave [5] is running its course. As the internal structure of the rally is corrective in nature, we can assume that it can form Terminal Impulsive pattern going ahead. As per this, prices may be in retracement phase of the rally witnessed from the lows of 2020 to the highs of 2022.  

First figure shows the internal structure of Primary wave [5]. In the entire rise we can see that prices have completed 2 standard correction in form of Diametric pattern near the highs of 18000 level in the month of August 2022. Post that we saw pullback in form of blue wave x and since then third standard correction is ongoing. Within this pattern, blue wave a completed at the highs of 18900 level and since then blue wave b is ongoing which has almost retraced 90% of blue wave a. This suggest that Flat correction pattern is under formation. However, any move below 16740 level will suggest that it may form Expanding Flat Correction pattern with wave b more than 100% of blue wave a.

Volume Profile – Price action on basis of Volume is one of the powerful ways of understanding Big Players activity and areas where major activity has taken place. In above chart of Nifty we can see high volume profile near 17120 (futures) level or around 17050 spot levels where major activity has taken place. Given the selloff this is the area where big players seem to have sold their positions. So, unless prices manage to cross back above 17050 trend will be sell on rise.

In a nutshell, by combining Neo wave along with Volume profile one can try to form strategy using Options to generate that parallel source of income in scientific way.

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