Looking at Reliance Industries Limited (RELIANCE) on the 1-hour chart, a classic Elliott Wave setup is developing right at a major historical price floor.
Let us break down the wave structure, look at the recent global market development, and plan a risk-managed approach for the week ahead.
The Macro Picture: The 5-3-5 Zigzag
Looking at the broader structure from the 1,473.40 peak, the market has been correcting in a clear 5-3-5 Zigzag pattern:
The Highlight: Ending Diagonal Wedge in Wave 5
The final leg of Wave C is the most important part of this chart. It is forming an Ending Diagonal Wedge, which is visible between the two narrowing blue trendlines.
This pattern is significant for three reasons:
The Monday Reality Check: Managing the US Market Sell-Off
On Friday, US indices faced a major sell-off after Indian markets closed, with the Nasdaq dropping over 4% and the S&P 500 down over 2.5%. This global weakness means Reliance will likely face heavy selling pressure and a potential gap-down open on Monday.
This global panic is exactly why a rule-based strategy is necessary. We do not guess or buy blindly at the open. Instead, we let the market choose between two paths:
The Strategy: Safe Entry vs Invalidation
To protect capital in an uncertain market, we only enter when the price confirms a reversal.
Bullish Entry Trigger
Invalidation Level (Stop Loss)
Disclaimer: This post is for educational purposes only and is not financial advice. I am not a SEBI-registered analyst. Please do your own research and manage your risk carefully.
Let us break down the wave structure, look at the recent global market development, and plan a risk-managed approach for the week ahead.
The Macro Picture: The 5-3-5 Zigzag
Looking at the broader structure from the 1,473.40 peak, the market has been correcting in a clear 5-3-5 Zigzag pattern:
- Wave A: A clean 5-wave impulse down to 1,312.60.
- Wave B: A 3-wave (A-B-C) corrective bounce that topped out near 1,371.10.
- Wave C: A final 5-wave leg down to clear out the remaining sellers.
The Highlight: Ending Diagonal Wedge in Wave 5
The final leg of Wave C is the most important part of this chart. It is forming an Ending Diagonal Wedge, which is visible between the two narrowing blue trendlines.
This pattern is significant for three reasons:
- Seller Exhaustion: The overlapping micro-waves (i to v) show that even though the price is grinding lower, the selling momentum is drying up.
- Key Support Alignment: The wedge is sitting directly on a major horizontal support zone.
- RSI Bullish Divergence: While the price made a lower low, the RSI indicator made a clear higher low (the solid line at the bottom). This indicates that the downward trend is losing strength.
The Monday Reality Check: Managing the US Market Sell-Off
On Friday, US indices faced a major sell-off after Indian markets closed, with the Nasdaq dropping over 4% and the S&P 500 down over 2.5%. This global weakness means Reliance will likely face heavy selling pressure and a potential gap-down open on Monday.
This global panic is exactly why a rule-based strategy is necessary. We do not guess or buy blindly at the open. Instead, we let the market choose between two paths:
- Path A (The Throw-Over): Panic causes a brief plunge below the green support line to flush out weak hands, but institutional buyers quickly step in and push the price back up into the wedge. If this happens, the bullish setup stays alive.
- Path B (Structural Breakdown): Heavy local selling cuts cleanly below the green support line on high volume. If this happens, the ending diagonal pattern is dead, Wave C is extending deeper, and we completely stay out of the trade.
The Strategy: Safe Entry vs Invalidation
To protect capital in an uncertain market, we only enter when the price confirms a reversal.
Bullish Entry Trigger
- Trigger Level: A clean hourly candle close above 1,308.50 (the peak of minor wave iv).
- Reasoning: Waiting for a close above 1,308.50 breaks the lower-high structure, confirms a breakout above the upper blue trendline, and proves that buyers have overcome the global market weakness.
Invalidation Level (Stop Loss)
- The Line in the Sand: The green Support / Invalidation line.
- Reasoning: If the price breaks and holds below this floor, the analysis is wrong. The trade idea is cancelled immediately to preserve trading capital.
Disclaimer: This post is for educational purposes only and is not financial advice. I am not a SEBI-registered analyst. Please do your own research and manage your risk carefully.
WaveXplorer | Elliott Wave insights
📊 X profile: @veerappa89
📊 X profile: @veerappa89
Bài đăng liên quan
Thông báo miễn trừ trách nhiệm
Thông tin và các ấn phẩm này không nhằm mục đích, và không cấu thành, lời khuyên hoặc khuyến nghị về tài chính, đầu tư, giao dịch hay các loại khác do TradingView cung cấp hoặc xác nhận. Đọc thêm tại Điều khoản Sử dụng.
WaveXplorer | Elliott Wave insights
📊 X profile: @veerappa89
📊 X profile: @veerappa89
Bài đăng liên quan
Thông báo miễn trừ trách nhiệm
Thông tin và các ấn phẩm này không nhằm mục đích, và không cấu thành, lời khuyên hoặc khuyến nghị về tài chính, đầu tư, giao dịch hay các loại khác do TradingView cung cấp hoặc xác nhận. Đọc thêm tại Điều khoản Sử dụng.