Elliott Wave count on the quarterly (3M) Nifty chart. Let’s quickly break it down:

Elliott wave Count on 3M chart 

• Wave (1): The initial long-term rally post-early 2000s aligns well.
• Wave (2): The correction into the 2008 financial crisis crash fits the textbook sharp Wave 2 retracement.
• Wave (3): Huge impulsive wave from 2009 till the 2020 high, which is typical since Wave 3 is often the longest and strongest.
• Wave (4): A noticeable corrective phase during the COVID-19 crash — a perfect retracement that respects Wave 3’s integrity.
• Wave (5): The Current strong rally post-2020 fits into Wave 5. Extended to the recent highs near 26,277, and interestingly, it’s approaching key Fibonacci extension levels.

Things to watch:

• Wave 5 could be nearing exhaustion as it's hitting that 3.414 extension zone i.e. 29442
• Keep an eye on RSI/momentum divergence on the higher timeframe.
• Volume isn’t expanding aggressively in this last leg, a typical caution for Wave 5 peaks.

Potential corrective targets for the upcoming ABC correction or map possible Fibonacci retracements for Wave (5) completion? 

Wave (5) Projections

• Right now, as per the chart, Nifty is approaching the 3.414 (21,166) to 4.764 (29,442) zone — typically, Wave 5 can truncate, extend, or overshoot.
• Watch for bearish divergences on higher timeframes (monthly/3M RSI, MACD).
• Post Wave (5): ABC Correction Zones
• Once Wave (5) tops out, here's where an ABC correction could possibly retrace:

Key Retracement Levels

(from the total move of Wave (4) low to Wave (5) top)

• 23.6% retracement: Minor pullback zone
• 38.2% retracement: Very typical for a Wave A or end of Wave C
• 50%-61.8% retracement: Stronger correction, deeper ABC possibilities

For reference, assuming Wave (5) tops near 26,500–27,000, the levels would be:

• 23.6%: ~21,500–22,000 (Which was tested once very recently)
• 38.2%: ~18,500–19,000
• 50%: ~16,500
• 61.8%: ~14,500

ABC Structure Possibility

• A Wave: Sharp initial fall (maybe to 18,500–19,000 zone)
• B Wave: Pullback to retest 22,000–23,000
• C Wave: Final leg down to 16,500–14,500 zone

Additional Clues

• Check if the correction is a Zigzag (5-3-5), Flat (3-3-5), or Triangle (3-3-3-3-3) pattern.
• Use Fibonacci time extensions as well — corrections often consume 38.2%–61.8% of the prior impulse move time.

Summary

This chart and wave count are well-aligned, and if Wave (5) is in its final stages, those retracement zones will be crucial for catching the ABC correction levels.

RSI - Relative Strength Index placement

RSI (14) 3M timeframe is currently around 73.75, which is historically elevated but not yet at extreme overbought levels like during Wave (3) top.

No visible negative divergence yet (i.e., price making higher highs while RSI makes lower highs) — but it’s flattening out while price still pushes higher. This early sign of momentum waning is classic for a late-stage Wave (5).

Also, notice how RSI peaked above 80 during Wave (3), but now in Wave (5), despite new price highs, RSI hasn’t crossed that prior peak. This is a potential hidden divergence in the making, often a prelude to a correction.

What this suggests:

Wave (5) is likely in its latter half or near completion.

Watch for RSI slipping below 70 and a possible bearish crossover with its moving average for early confirmation of a trend reversal.

If you see price making a higher high but RSI failing to make a new high, that would be a strong confirmation of a Wave (5) top.

Conclusion:

 RSI placement is perfectly fine for this Elliott count, and it’s showing textbook momentum behaviour for a Wave (5) scenario. Keep monitoring for divergence or breakdown signs.

RSI Divergence Possibility - 

RSI Divergence Analysis on Your Elliott Wave Count

From the chart:

• Wave (3) Peak: RSI crossed 80
• Current Wave (5): Price has made a higher high, but RSI is at 73.75 — lower than at Wave (3) peak.

What does this mean?

This is a classic case of negative (bearish) RSI divergence forming:

Price: Higher highs

RSI: Lower highs

Interpretation:

• Suggests that while price is pushing new highs (Wave 5 extension), momentum is weakening.
• Often seen near Wave (5) terminations in Elliott Wave theory — it signals diminishing participation and strength in the rally.
• A reliable precursor to a corrective ABC pattern.

How to Trade/Use This:

Watch for a break below RSI 70 on a closing basis.

If RSI dips while price remains flat or marginally higher, that’s further divergence confirmation.

Combine with a bearish candle pattern (like an engulfing or evening star) at your target zones for a higher probability reversal trade.

Summary:

Elliott Wave count now shows a developing RSI negative divergence on the 3M timeframe between Wave (3) and Wave (5).

This increases the probability of a medium-term top forming in the 26,500–27,500 range.

Current Context  - Price at 25,000 (Nifty 50)

• Wave (5) is already extended, approaching key Fibonacci projections.
• RSI at 73.75 — elevated, but not yet divergent or overbought extreme.
• No sharp rejection yet from resistance zones — price still holds above prior quarterly closes.

Probability of Higher Targets (26,500–29,000+)

Arguments for higher levels

1.  Wave (5) extensions can be unpredictable — they sometimes extend to 4.764 or even 5.0 extensions.
2.  No visible major negative divergence yet on 3M RSI — while momentum is flattening, it hasn’t decisively reversed.
3.  India macro fundamentals + liquidity remain strong; market breadth hasn’t collapsed.
4. Post-election rally possibility (if political outcomes/stability remain favourable in June 2024 — which often triggers final euphoric wave moves)

Arguments against further extension

1. Wave (5) has already covered significant ground rapidly — classic behavior before exhaustion.
2.  Approaching psychological round number resistance at 26,500–27,000
3.  RSI flattening below Wave (3) peak — subtle momentum divergence.
4. Volume hasn’t been expanding proportionally in this rally leg — another caution flag.

Estimated Probabilities

Based on Elliott Wave principles, Fibonacci extension behaviour, and RSI position:

• 50% probability we touch or marginally breach 26,500–27,000
• 30% probability we see a spike to 29,000–30,000 (extreme Wave (5) extension, driven by euphoria or a major trigger like election results)
• 20% probability this level holds as a medium-term top and ABC correction begins within the next 1–3 quarters.

Key Levels to Watch

• 26,500 —  immediate test
• 27,000–27,500 — likely euphoria zone
• 29,400 — 4.764 Fib extension, likely Wave (5) cap

If price convincingly closes above 26,500 on 3M timeframe with RSI still holding 70+, odds of extension to 27,500+ increase sharply.

Bottom Line

Yes — higher targets from 25,000 are possible and quite probable in the short term, unless RSI forms a clear divergence or a sharp volume rejection appears.

But risk-reward favours cautious trailing rather than fresh aggressive longs here.

A risk-managed positional trade plan 

Positional Trade Plan (3–6 Month Horizon)

Current Price: 25,000 (Nifty 50)

Trade Setup Idea:

1. Long Position (if price sustains above 25,200)

• Entry: 25,200–25,500
• Target 1: 26,500
• Target 2: 27,200
• Target 3 (if euphoric extension): 29,400
• Stop-loss:
• Closing basis below 24,300 (below last quarterly close + recent swing low)
• Risk-Reward:
• At 25,300 entry
• T1: +1,200 pts
• T2: +2,000 pts
• SL: -1,000 pts
• Risk-reward: 1:1.2 to 1:2
• Position sizing:
• Risk no more than 1–2% of capital on this trade

2. Reversal Trade (if price fails at 26,500–27,000 zone)

Watch for: RSI divergence on daily or weekly. A strong bearish engulfing candle/breakdown below 25,500 (Not applicable yet). Rising volumes on red candles

• Entry: Below 25,500 after confirmation
• Target 1: 24,000
• Target 2: 22,000 (38.2% retracement)
• Target 3: 19,000 (ABC Wave C potential zone)
• Stop-loss:
• Above 26,200
• Risk-reward: 1:2.5+ if it triggers

Key Technical Confirmation Tools

• RSI 14 (3M, Weekly, Daily) — Watch for divergence and breakdown under 70/60
• Volume — Expansion on red candles, fading volume on rallies
• Trendline break — Break below recent rising support trendline on weekly chart
• Option chain data — Check open interest for heavy resistance buildup at 26,500–27,000

Trade Management Tips

• Trail stop-loss above each support after each target hit.
• If RSI hits 80+ and price near 27,000, book 50% profit.
• Don’t carry aggressive positions into major event days (like election result week)

Visual Trade Zones on the Chart

• Based on Fibonacci levels and wave count:
• Chart Zones:
• Entry Long: Above 25,200 (preferably closing basis)
• Target Zone 1: 26,500 (Fibonacci cluster + psychological resistance)
• Target Zone 2: 27,200 (upper band extension, possible Wave (5) climax)
• Euphoria Spike Zone: 29,400 (4.764 Fib — likely final Wave (5) exhaustion)
• Stop-Loss Zone: 24,300 (below recent swing low and last quarterly close)
• Key Watch: RSI approaching or exceeding 80, combined with divergence or bearish candle pattern at upper targets.

 Option Hedging Strategy

• If you're comfortable with options, here's a clean positional hedge idea to ride the rally while protecting against a sudden reversal:
• Positional Option Combo (approx. 2–3 months out expiry)
• If Nifty is around 25,200–25,500
• Buy 1 Lot Nifty 26,000 CE
• Sell 1 Lot Nifty 27,500 CE
• (to reduce cost)
• And to hedge downside risk:
• Buy 1 Lot Nifty 24,000 PE

Result:

• Profits from 25,500 to 27,500
• Limited loss below 24,000
• Net debit reduced due to the call spread

Adjustments:

If Nifty closes below 24,800 — exit CE spread, hold PE as standalone protection.

C. Trade Management Tips

Trail your stop-losses: As soon as Nifty crosses 26,000, raise SL to 25,500.
Partial Book: If RSI crosses 78–80 or a bearish engulfing candle appears around 26,500–27,200 — book 50–70% profits.
Use OI and option chain to confirm resistance at each major strike.

Estimated Time for 29,000 Nifty, if it has to come. 

• If this is indeed Wave (5) in progress — it typically completes faster and more steeply than Wave (3).
• Wave (3) on your chart took roughly 2016 to 2022 (about 6 years), and Wave (5) already started accelerating post-2022.
• From current momentum, RSI, and Fibonacci levels:
• If bullish momentum sustains: Nifty can test the 29,000–29,400 zone by mid to end of 2026.
• If a short corrective consolidation happens first: Then late 2026 to early 2027.

Key reasons:

• RSI nearing overbought but still has headroom.
• 3M candles strong with higher highs and higher closes.
• India macros and liquidity inflow trends align for a euphoric Wave (5) spike.

Caution:

If Nifty breaks below 24,500–24,300 on quarterly close, this timing stretches or invalidates the bullish Wave (5) extension.

Conclusion: Should You Stay Cautious or Ride the Rally?

• ✅Higher targets (26,500–29,400) remain probable as long as RSI holds above 70 and no major divergence breakdown appears.
• ✅Watch for RSI divergence confirmation, weak volume rallies, or bearish patterns at resistance zones.
• ✅Final Tip: Don’t carry aggressive positions into high-volatility event weeks like election results. Use trailing stop-losses and hedge wisely.