Tuesday, September 27, 2016

What to expect next in Energy Commodities like Natural Gas?

Understanding long term structure of Natural Gas with the application of Elliott wave, Channels, Moving average and RSI.

It is not only precious metals which have shown sharp rally in the year of 2016 but along with this energy commodities have also shown relief rally. 

The movement witnessed since start of 2016 again reflects that how majority can be at wrong side when trend is due to reverse. In the month of February 2016 WTI Crude was trading at $26.06 and post that it sharply recovered towards $51 level. The gain of more than 100% when majority was expecting Crude to move lower towards $10 level. The same is the case with MCX Natural Gas which has rallied from the low of 110 to 202 level in last few months. So what it suggests for Energy Commodities from medium term perspective? Understanding the trend of any asset class is important with objective technical tools, so that one can prepare himself for the next trend. Below research we have taken from “The Commodity Waves Short Term Update” dated 20th September 2016 on MCX Natural Gas.             

MCX Natural Gas weekly chart:           

(Part of research taken from “The Commodity Waves Short Term Update” dated 20th September 2016)

Wave Analysis:

“Post the underperformance of last few years, in the current year of 2016 finally some relief sign was witnessed in Energy space. Crude has shown recovery from the low of 1800 and as of now moving in consolidation whereas Natural Gas bounced back from the important support of 110 and sharply moved higher towards 202 level in last few months. This is suggesting that underperformance is complete and in next few months we can witness uptick in this commodity. Let us understand the long term chart of Natural Gas.

The weekly chart indicates that in the year of 2008 in which Financial Crisis began prices made important top at 600 level and since then correction is ongoing. This correction is forming complex correction pattern (W-X-Y-X-Z). Recent bounce back is witnessed from the zone which was seen in 2009. It is interesting to see that ignoring the news or events prices respected the support area and sharply bounced back.

Prices have retraced the last leg of down move in faster time. This is indicating that intermediate wave Y has completed at the low of 110 and recent rise can be in form of intermediate wave X of complex correction pattern. Price action from medium term perspective will provide further clues for the same. 20 weeks Exponential moving average which acted as resistance in 2015 is now providing support. This is as per polarity rule of reversal. Post the sharp rise some consolidation is ongoing from last few weeks and post the same prices should move higher towards 250-260 zone where blue parallel channel is placed.

(60 mins chart is removed purposely which is shown in original research report)

As shown in 60 mins chart, the rise from 110 to 202 is impulsive in nature which completed minor wave (a) and post that minor wave (b) is ongoing. This wave (b) is intact in red downward moving channel and as of now prices are trading at the resistance of the same. We require move above 205 followed by 208 to confirm that next leg on upside has started. Unless that happens sideways to negative action can continue.

In short, 205 and 196 is the short term range for Natural Gas. Break of either of these levels will start short term trend in that direction. From medium term perspective, 170 is the crucial support.”

“The Commodity Waves Short Term Update” includes daily research on Gold, Silver, Crude and Copper and Lead, Zinc, Natural Gas on alternate weekly basis with Elliott wave counts. For Subscription Contact Us

Saturday, September 24, 2016

Time cycles of 54 days combined with Elliott wave and Channels

Nifty managed to sustain the Gap up opening and moved towards the important level of 8900. Further break of 8910 will keep short term trend positive.

Below research is originally published in morning of 23rd September 2016 in "The Financial Waves short term update" For more detailed research visit www.wavesstrategy.com
Nifty daily chart:

Nifty 60 mins chart

Wave analysis:

In previous update we mentioned that “Nifty has continued to move within the Bollinger Bands and it will be only on break above 8820 - 8830 we can expect short term positivity towards 8900 or higher levels with 8688 as very important support.”

Nifty had a Big Gap up opening near 8780 levels post the rally in Global markets on back of FED keeping rates unchanged. Prices stayed within a narrow range after the initial thrust with mixed performance seen within the sectors. The high made on the opening was not taken out on intraday but as the Gap is unfilled this will keep bias positive.

Over medium term perspective, wave g of 3rd corrective pattern is ongoing. The trendline of the expanding pattern shown few months back is still valid and the high made at 8968 was exactly on this line post which we saw the reversal. As this line is moving higher the resistance will keep shifting and breakout above 8900 will open up possibilities of crossing the psychological 9000 mark.

We are showing 54 days Time cycles again as prices have entered into important zone of 30 days post the previous cycle low. Earlier during the topping zone of this cycle prices moved sideways instead of down. From the lows of 6825 this cycle has managed to capture important lows and momentum reduced post cycle crossing 34 days. Currently we are in 31st day from previous lows and it is important to see if momentum from here starts reducing.

As shown on hourly chart, prices are now contained within the red channel. There was a breakout above the channel with a Gap on 6th September and faster reversal back within it again with a Gap. This indicates that the red channel might still be working and the resistance of the same is now near 8900 levels. Also move above 8910 will make the ongoing wave e bigger than that of wave c which will suggest that complex corrective formation is ongoing and invalidate the current assumption of Extracting Triangle. 

In short, move above 8900 – 8910 will resume the short term uptrend towards 9000 mark. Bias will be positive as long as yesterday’s Gap area followed by 8750 is protected.

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Tuesday, September 20, 2016

Trading Strategies I followed to win CNBC TV18 Bull’s Eye stock trading show!

Techniques followed during the week for stock selection and trading strategy adopted that helped to win the stock trading show Bull’s Eye on CNBC TV18

It is exciting to participate in the stock trading game show but at the same time it is important to live upto the expectations of millions by not betting on lower probable trades. It is important to follow prudent risk and money management strategies. Market dynamics this time were different than that before in May 2016 when I won ET Now show with substantial margin.

For reference anyone wants to read about strategies followed then in May 2016 can refer the following link: Rules followed during ET Now game show where I won with substantial margin can be found in this link – Rules followed to win ET Now show by Huge margin

Following are a few strategies I followed for Bull’s Eye show on CNBC TV18. Notional amount of 400,000 was given that has to be spread across 4 different stocks on daily basis.

  • Identifying overall market direction is most important as majority of stocks behave in close correlation to index even though magnitude of rise or fall might be different
  •  It was challenging to catch hold of momentum stocks during the week of 12th September 2016 to 16th September 2016 as the main index Nifty was in absolute sideways direction after a sharp decline on 12th September.
  • During such scenarios it is better to bet on the outperforming stocks for going long and shorting the ones that hardly showed any pullback
  • Key differentiator was managing to consistently perform rather than betting everything in one direction when the trend was not clear
  • Techniques like Neo wave, Time Cycle analysis on very smaller degree helped me to gauge the market direction on last day of the week i.e. 16th September when I was expecting a correction after a brief run up whereas other participants maintained all buy calls, I was short on 3 stocks and long on only 1 stock – Cox & Kings that has tendency to move independent to the main index
  • During final hour of the trade there was sharp selloff on majority of stocks and at the same time Cox & Kings recovered sharply into positive.

Definitely there is element of lady luck that also worked in favor and after the tough competition, I managed to outperform and was declared as a winner.

You might not find specific techniques which I followed during the day but various tools that I believe and practice rigorously is Elliott wave, Neo wave, Time cycles, Channels and identifying the direction of main index for the day is crucial to understand if it is better to be tilted more towards long side or shorts.

Techniques were more or less similar to that followed during May 2016 – ET Now game show. Please refer this link – Trading Rules to follow

In a nutshell, it feels good to win another stock trading game show when millions are watching but trust me the pressure is equally high…Actual trading is no different and a clearly defined strategy should be in place before you place your bets! Happy Trading…:-) For more details visit Contact US

Thursday, September 15, 2016

Will Rupee - USDINR reverse back to 69? Impact on Stock Market?

Understanding impact of USDINR on stock market along with Elliott wave counts and inter-market analysis.

During the crucial juncture it becomes important to look at different asset classes such as USDINR and Indian Equity Markets which has high correlation during reversals. This correlation differs in magnitude but it can provide clues for the change in trend.

Understanding Correlation: Post making high at 8968 level, Nifty has showed sharp fall towards 8688 level and that too with big Gap down opening of more than 120 points on 12th September 2016. On the other side USDINR has reversed from the important support of 66 and moved higher towards 67.10 level. In the month of February 2016Nifty made bottom at 6825 level whereas USDINR made top at 68.88 level. So, crucial areas are associated with reversal in close vicinity in both of these assets.

Is recent reversal in USDINR signaling towards important top in Equity Markets?

Apart from Correlation it also becomes vital to analyze the individual assets applying Elliott wave counts which can provide clue for the next move. Below we have shown daily chart of USDINR taken from “The Forex Waves Short Term Update”.

USDINR Daily chart spot:

(Part of research taken from 12th September 2016)

Wave Analysis:

In the last trading session USDINR bounced back and broke the pivot resistance of 66.80 (fut) levels suggesting that bulls are coming in action since a couple of days.

The daily chart of USDINR shows that currently wave…. is ongoing which is subdividing further but still the previous pivot low of 66.00 (fut) levels is intact. From medium term perspective only a move below the same will result into deeper correction in the form of wave iv. However looking at the smaller picture we can get a clear indication of the ongoing trend.

It seems that the action is this currency pair is about to start and we can see movement back above the channel. Reversal in currency along with Equities cannot be mere coincidence as we have seen this happening many times before as well.

Keeping a tab on cross assets can sometime provide vital clues for equity markets. To know where is Nifty headed along with currency outlook get access to “The Financial Waves short term update” along with “The Forex Waves Short Term Update”which covers USDINR, EURINR, JPYINR and GBPINR with important levels.

We have managed to achieve 100% success ratio in our Currency calls for month of August. This simply shows it is possible to trade Forex even when there are external interventions. Technical analysis is all about probability and there is no guarantee of such performance in future. Nevertheless, we thrive towards achieving the best possible risk reward and trading tips based on technical analysis and Elliott wave. For subscription to Trading tips along with research reports visit Pricing Page or Contact US for more details.

Wednesday, September 14, 2016

Is Yes Bank medium term up trend in danger?

Outlook on Yes Bank applying Elliott wave, channels and moving averages.

It was in the last week where majority were bullish as Nifty reached near the psychological level of 9000. The rise from 8540 to 8966 level was sharp and fast in nature which is enough to make the euphoria. During such times it is better to calculate the risk component. The movement of last 4 days is proof of the same that bearing high risk at the euphoric times can be dangerous. The outperforming stock like Yes Bank has retraced last 5 weeks of rise in only 2 weeks. When leaders start to underperform it provides a warning sign.

The Financial Waves Short Term Update covers in-depth research on Nifty and 3 stocks on daily basis. We have shown part of research on Yes Bank taken from the report dated 12th September 2016.     

Yes Bank weekly chart:

Yes Bank 60 mins chart: (Anticipated in the morning of 12th September 2016_

Yes Bank 60 mins chart: (Happened till now)

(Part of research taken from 12th September 2016)

Wave analysis:

“In the previous update on Yes Bank we mentioned that “On downside 1300 is the crucial support. Move above 1350 will take prices towards 1390 or higher levels.”

Yes Bank continued to behave as expected. Prices indeed broke the level of 1350 and crossed above 1390 rather quickly. The rise was euphoric and near vertical. But interesting thing to observe is that after reaching towards the channel resistance we saw an equally faster opposite move that took out the last segment of rise in faster time. This clearly highlights the fact that despite of news or event which is currently ongoing in this stock, the technical resistance levels have worked very well.

As shown on the weekly chart, for the first time since the trend started from 740 levels, prices have decisively broken and closed below the 5 weekly Exponential Moving average. It is not very often to see such euphoric rise followed by serious capitulation but it clearly highlights the risk of going long exactly when euphoria was highest.

Now the last rising segment has been retraced back equally fast which indicates an important top might be formed in this stock. For now some pullback cannot be ruled out from the oversold state but break below 1240 might continue the downtrend further.

As shown on hourly chart, prices have broken below the important channel support as well and this was the leader within the banking space which is sending nervous sign going forward for the entire sector.

In short, medium term trend for Yes Bank looks to be in danger and any pullback can be only temporary. Volatility can be high and so one should use prudent stop levels. 1325 can act as short term resistance and move below 1240 will resume the down move.”

Happened: In the session of 12th September 2016 itself Yes Bank broke below 1240 and touched the low of 1197 level. Post that consolidation is ongoing. Now what should be the trading strategy?

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