Nifty : Make or Break coming soon

As per last blog we got a bounce from 8000 (7997 to be exact). Nifty almost reached 8500 but has lost momentum in the resistance zone of 8450-8600. As per the new chart we see new resistance zone developing around 8500-8600 yet again and until 8600 is crossed the chances of this rally to fail exists. Support exists around 8000 and 7700 on the downside.

In my opinion we should definitely test 8000 again and in most likelihood even test 7700 if 8000 psychological level is breached. But before we do that we should get one sell candle in the region of 8500-8600, as we have got in almost all the last four swing highs recently! Another reason I believe Nifty would test 8000 and below is the fact that we are yet to see a strong positive divergence on the MACD and RSI oscillators.

Nifty : Dead Cat Bounce Ahead?

While looking at the daily charts after a really long time, apart from a clear Head and Shoulder pattern what you can easily see is strong resistance in the 8500-8600 region while support can be expected around 8000.

I also see some divergence in the oscillators and would be reasonable to expect some rally after such a strong selling. The fact that long term trend is still intact, I expect the current correction to be of zig-zag type. So either the correction has almost ended (which I doubt) or there is at least another leg down; which can only start after a leg up from current level. So after a 1000 point correction, an upward correction of 38% to 50% is expected. Interestingly a 400-500 point does coincide with the Resistance!