Long term NIFTY wave counts - potential downside ahead!

I was reviewing long term EW counts of NIFTY and here is what I think. Overall, I can see potential 2 alternatives and have highlighted them in blue and red respectively. This is a monthly chart.

Blue Alternative

Let's start with blue counts first. Larger degree wave 1 (marked by square blue box) which started from Covid lows of March 2020, ended in October 2021. Wave 1 is the same for both blue and red alternatives since there is no confusion till that point. But from that point onward, things change. I have marked the correction in larger degree wave 2 (marked by square blue box) as a W-X-Y correction which ended in March 2023. From there, I am assuming a larger degree wave 3 started.

Within the larger degree wave 3, we seem to be near completion of the minor degree wave (i) of larger degree wave 3. This is marked in black since wave (i) of 3 in the red alternative also ends at the same point even though counts for the red alternative are different.

We can see the red bar forming for this month but this is too early to say if we'll get a negative close for this month. However, wave v of (i) has an ending diagonal look (more clearly visible in lower timeframes). Plus, we can see massive negative divergences in RSI and momentum oscillator which suggests that a correction is due. Make no mistake - correction will occur soon. If not this month, then maybe next month.

For the uninitiated, ending diagonal (ED) is typically the last leg of a move. In this case, it should be signaling the ending of wave (i) of 3.

Now, before we come to the size of the correction, let's take a look at the red alternative.

Red Alternative

Larger degree wave 1 remains the same in red alternative as mentioned earlier. However, in this alternative, larger degree wave 2 (marked by square red box) ended in June 2023 followed by immediate start of larger degree wave 3. In this alternative, we are taking all follow-up moves as i-ii-i-ii-iii-iv-iii-iv-v.

Don't worry about this count, just understand that this move (first leg (i) of larger degree wave 3) also seems to be ending exactly where blue wave count suggests, i.e. possibly this month end or next. I can't confirm now since this month's candle is still forming.

Conclusion

Both wave counts suggest that minor degree wave "(ii) of 3" (marked in black on the right most part of the chart) should begin soon, if not already started.

Finally, coming to the size of this move, if we go by blue alternative, 38.2% retracement level is around 20500 and 50% is around 19800.

And if we go by the red alternative then 50% retracement is around 19000, 61.8% is around 18100. At the minimum, I would expect 19200-19500 levels (38.2% retracement) if the red alternative is in play.

So which one is going to happen? To be honest, I have no idea but we can go with the least of both alternatives at a tentative level and refine as the move evolves. That gives us 19800 which is still more than 2000 points correction from current levels.

20 month moving average is currently at 19675, and rising. This potentially makes 19800 a viable target in a month or two.

Happy (wave) counting ;-)