Nifty has been rising from steadily from Low of 5933 on 04-Feb-2014 till high of 7758, A rally of almost 1825 points in 94 trading session which is a huge move. Market in short term is rising based on Budget expectation which will be presented on 10 July. I have discussed Nifty performance on Union Budget day here Nifty’s Movement on Union Budget day
Now Lets analyze how Nifty can perform in coming few session and where It can potentially make a short term top. Do remember Healthy correction are required in bull market,for further rise, straight line rise will never be good in long term.
Nifty started its rise from pre election rise on 8 May from 6638 which got topped out on 7564 on 16 May as discussed in below chart.The rise was of 925 points and took 7 trading session to complete.
The next rise started on 30-May when Nifty made a freak low @ 7118 and ended @ 7700 on 11-June. The rise was of 582 points and took 11 trading session to complete. Now here comes the intresting part, As per Fibo theory 61.8% retracement is called Golden Ratio and plays a very important part in stock market. So if we take 61.8% of last rise of 925 points it comes @ 571 points which is very near to 582 point rise we have seen from 7118 to 7700.
Now applying the same concept to current rise, Current rise started on 7442 on 23 June and is still continuing, If we calculate the 61.8% retracement of last rise of 582 it comes around 359 points so if we add 7441+359 it comes around 7800. So we can form a potential short term top around 7800 can see some correction.
Do understand this analyze stands invalid if Nifty close above 7800 for 3 days in a row and use this information just as an input to your trading system do not Blindly trade on this.