A technical trader has to watch a few things carefully, especially if we are in the fourth wave position. First, see if the 2nd wave was a simple correction. If you can confirm to yourself that the second wave was a simple one, then the fourth wave will very likely be a complex correction. I would usually avoid trading a fourth wave correction because at this position, a stock can change course quite unexpectedly. What looks like a clear formation today (a triangle in Tata Steel 2 days back!) can become a different pattern another day.
In the case of Tata Steel, I have indicated that the 363-364 level will attract. However, there is no guarantee that we will get there the first try, or if we did, that it will hold. Don’t be surprised if we go lower to 353 and then climb again. Alternately, if the broad market recovers, we could find support around 373 and go back up. Later on, we could come down again to reach 364. Thus, there are too many variables at play in a complex 4th wave for you to trade this stock. One this is certain. If we have counted the waves correctly, then a move back as a fifth wave should be expected, and that fifth wave will at least be equal to the first wave, or Rs 108. Assuming one buys this stock in two lots at 365 and 323 (close to the 50% retracement level), the average rate will be 344. If the stock actually reaches 322 before climbing 108, the objective will be 430. That is still a 25% gain. Thus, if you insist on trading the upcoming fifth wave, plan your trades based on these inputs.