What if the upmove doesn’t occur? Well, in that case, the lower range (horizontal arrow) should be used as a stop. There aren’t any closer stops. As a bearish signal, this can be meaningful but that is something that I would prefer to deal with in case the occasion comes up. For now, I don’t expect that to happen.
The indicator is not to be mistaken to think it gives only ‘buy’ signals. I have not marked those because I really wanted to highlight the last signal.
In the last letter, I had mentioned that we should be looking for higher bottoms to form now. So, even if there is a dip, I would expect that the recent low near 17,400 would continue to hold. The Adani matter seems to be running its course and while volatility persists in some of the group stocks, a few are still down for the count as the news waxes and wanes.
Curiously, I find that the time cycle of Adani Enterprises Ltd. (the focus stock) seems getting well-tied with that of the Nifty from around Feb. 18 onwards. And, since I have the market making a rally into the ending week or more of the month, I would expect that Adani Enterprises may also find some reasons to rally. Let’s see how that relationship plays out or if it does. If the Adani matter recedes to the background or group stocks begin to rally (or even stop declining), the sentiment would get a definite breather.
Now, here is some interesting Gann degree analysis. Both the low (944.50) and the subsequent rally high (2,234) are sharing 270 degree (2×135) relation and hence, can be said to be in opposition. By that token, Adani Enterprises will have to either push above that high shortly or meet with some declines ahead. In the decline, I would watch prices of 1,745 and 1,580 rather closely for judging trends of the stock. In case the second support is lost, then the bears may make a comeback. Incidentally, these support levels also correspond to some Fib retracement levels too. So, for Adani bulls, 1,580 should be a good stop to maintain. Next Friday close (Feb. 17) would be a good time turning point to watch.
So, we will leave it here for the week. Lack of new data kind of restricts what we can do. The next week doesn’t really promise much by way of trends but maybe something new shall emerge. The only time signature I have for the next week is Feb. 15, and that comes up for a possible down day. So, maybe some more ambling along, hit a low that forms a higher bottom and then move up from there is what I would think is the pathway for the coming week.