The Rally in Nifty continued to 7560 till the BJP victory on 16th May 2014. Post event there was a sharp intra-day correction to 7130 on that day. After a correction the Rally Continued to 7500 till today. However Market again witnessed a sharp sell off today. This might be an indication of possible Trend Reversal, as Market is Highly Overbought.
1) The rise from 5933 which looked like an Impulse until the Price action prior to 16th May, is actually a corrective Rally; and hence could not be considered as part of 3rd wave. The entire move from 5118-7560 might be part of a Leading Diagonal, if we consider this as a start of a New Bull Market. Currently Wave (c) of the Leading Diagonal from 5118 might have just been completed today. And a correction in Wave (d) to 6400 looks to be on cards over next 2 months. Post this Nifty May continue it's uptrend in Wave (e) of a Diagonal.
2) Another alternative of this rise being a part of the corrective wave from 4531 over last 3 years as I have been always mentioning in all my previous posts.
Currently break below 7080 would drag Nifty lower to 6870-6640 and finally to 6400. After which Rally may resume in case of New Bull Market. In case of the New Bull correction should not go below 6360. Breach of these levels would invalidate the assumption of New Bull Market.
Thanks & Regards,