EURUSD: BROKE 1.3000 level… what is short term trend?

EURUSD: BROKE 1.3000 level… what is short term trend?

By Waves Strategy Advisors, Following is published in alternate day Global research report "The Global Waves". For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

EURUSD - The world’s most popular forex pair has been consolidating since last month between the range of 1.30-1.33.

 Euro-dollar exchange rate fell as the U.S. dollar took the upper hand or euro weakness has been explained by forex analyst to support the day movement.

On other hand, Elliott wave pattern on chart warned our clients before the fall and asked them to refrain from creating any fresh long position in this pair. Below we have shown EURUSD daily chart which is picked up from the Global research report – “The Global Waves”
 

EUR/USD Daily Chart:

Anticipated on 15^th May 2013:

Happened till now:

Wave Analysis:

We have been accurate in capturing two days fall in EURUSD, prices breached the strong support of 1.300 levels decisively and made a low of 1.250 till now.

After one month sideways action between the range of 1.30-1.33, yesterday prices have closed below 1.300 for first time and formed a big bearish bar. As per wave perspective, prices have ended minute wave a of minor wave (b) near 1.32 and currently moving in the form of minute wave b.

There is more to the above analysis which is clearly discussed in our alternate day Global research report.

It's the crowd psychology of the forex traders that moves the markets, not the news. Don’t strike out on the next, near-term opportunity in EURUSD. Subscribe to the Global Research - The Global Waves which cover Bullions, International Currency pairs and DJIA. For more information write to us at  helpdesk@wavesstartegy.com or call us on +91 9920422202/+ 91 22 288313588 or visit www.wavesstrategy.com
 

USDINR broke year long consolidation! Nifty concept of multiple Moving Averages!!!

Following article is published in morning daily research report "The Financial Waves" by Waves Strategy Advisors.    We have been constantly warning our subscribers about an upcoming downtrend in Nifty which materialized today. To know more on subscribing this daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Bottom Line: Nifty continues to protect its previous lows on closing basis. Momentum is reaching extreme levels! USDINR gave a strong breakout from yearlong pattern…

           USDINR Daily chart spot:

Wave Analysis:

USDINR has given a very important move on Friday. Prices have managed to close above the year long resistance line. If this breakout as shown on above chart is valid then we should expect a strong up move towards 57 levels or higher very quickly. Indian currency pair has been moving more independently over past few weeks irrespective of movement in equity markets. However such isolated movement cannot last for extended period of time and we can see increase in correlation again between INR and Equity. Also INR has been constantly protecting the lower end of the trendline despite of sharp up move in equity markets.

Nifty up move on Friday failed to provide any negative movement on USDINR which was also up by more than 1% in single day. If the breakout is genuine and INR is leading this time then equity should turn down to support the breakout on USDINR.

In short, it will be extremely interesting to observe if Nifty can continue the uptrend on back of depreciation in Indian Rupee which is now expected to reach near 57 levels. But we have our doubts and equity markets should now oblige sometime this week by turning down and giving negative price confirmation. But unless Nifty closes below important supports we will refrain from catching a top!

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

Nifty continued to move in uptrend and has so far not given any negative price confirmation. The individual parameters are reaching extreme levels and slowdown in momentum is very much evident from the momentum indicators on shorter time frames. However as we have been constantly mentioning price confirmation is one parameter which is still pending. A strong build up in momentum from current levels will change the parameters that are derivatives of price but such movements are rare events. Please understand that the probabilities are still high for prices to turn but there are always alternative scenarios to be embraced in case prices do not conform as expected.

Even on Friday and testing period on Saturday Nifty and Sensex both have managed to close above the previous day’s low and not yet closed below any of the levels we have mentioned in past week thereby maintaining the short term trend on upside. In the entire up move from 5470 to current levels not a single bar has closed below previous day’s low and this one simple technique of price has not given negative confirmation. A close below previous bar does not necessarily mean start of downtrend but does indicate halt in the uptrend and atleast sideways action if not negative. Break of important supports currently at 6045 and 6020 will indicate a move atleast towards 5850 levels over short term. We will have clear downside projection once we have negative price confirmation.

Mean reversion:We are showing the concept of Moving averages and difference of 2 moving average which has been giving very good indication on maturity of trend. As seen on daily chart 5 period Exponential and 20 period Exponential moving averages are very good from providing supports, resistance and direction of trend. Each day’s low has been taking support on 5 days MA and only a break below this which is currently at 6045 will indicate that the short term uptrend is in danger. The difference of Moving average helps us to understand if prices are due for mean reversion. Mean reversion is a statistical technique and it indicates prices eventually revert to its mean. We are using 20 days exponential MA as mean. The difference of 5 and 20 MA has reached an extreme level seen in entire year which again indicates a mean reversion should happen and 5 days MA along with prices should move back towards 20 days MA.

USDINR movement:USDINR chart shown above is now added as another negative parameter for equity markets and if our projection on USDINR towards 57 is correct which cannot happen without turn in equity markets on downside. As we always mention correlation in Currency & Equity markets are high during major turning points and the lead lag effect lasts only for few days. The magnitude of rise or fall varies but turning happens in close proximity.

RSI on hourly chart continues to show loss of momentum and negative divergence. However a strong move up above 6140 will remove this divergence and will also break the upward sloping resistance trendline opening further upside potential.

In short, we continue to re-iterate that many of the techniques are showing weakness in current uptrend but prices are yet to confirm. A move below 6045 will now be required as first sign of weakness and we will adopt alternative scenario on close above 6140 levels and /or if overall breadth & momentum of market starts improving from here on!

The above is published in morning daily research report "The Financial Waves" by Waves Strategy Advisors.    We have been constantly warning our subscribers about an upcoming downtrend in Nifty which materialized today. To know more on subscribing this daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Sensex: Time Cycles, Elliott wave counts & Channels!

Sensex: Time Cycles, Elliott wave counts & Channels!

In today’s morning equity research report “The Financial Waves” by Waves Strategy Advisors (www.wavesstrategy.com) we have provided very important technical findings from basic technical techniques to advanced concepts all of which are indicating in one single direction.

Bottom Line: Sensex Time cycles, Price ROC, Channels and Fractals continue to suggest very important ………. formation under process…

Sensex Time Cycles: published complete chart in morning research report

Wave Analysis:

We are showing Sensex Daily chart with very important observations from medium term perspective.

Time Cycles: We have been intermittently showing ??? days’ Time Cycles every few months when prices approach near the cycle days. We have tweaked this cycle lately to accommodate the recent price action and this cycle has been working precisely not only to capture bottoms (shown before) but also …………. Infact the day of 29^th January 2013 also conforms to this analysis. …..This cycle has worked to the point since 2011 but we will still give leeway of 10% which is ???

Fractal Nature: The current up move from the bottom of 18144 continue to exhibit a very similar pattern compared to …… 2012. Infact the strength of trend is also similar. As per this Fractal nature prices should do what it did before i.e. ………..

Price ROC: 12 days price ROC shows that this momentum indicator has turned down everytime it has come near 7. More than year of data is clearly showing that ROC value has never crossed above ??? level. Even this time ………..

Channels: We have mentioned before that each and every move on Nifty and Sensex has been perfectly channelized since the start of 2011. The entire rally of 2012 has also been within the channel. Prices are now very close to the upper end of the channel drawn since December 2011.

Elliott waves: Prices have retraced the entire up move wave 5 of C (shown in Nifty daily chart) in faster time thereby indicating that the major trend ……. Nifty 60 mins chart also shows the minor wave counts …….

Square of Price and Time: Sensex has so far shown 14 days of rally from the bottom of 18144 to the high of 20037 yesterday which means Sensex has moved by 1893 points. This indicates that on an average prices have been moving by 1893 / 14 = 135 points. Now, 135 is a very important geometric degree. The angle of 45,90,135,180,225, 270, 360 are all important degrees for Price Time combination. In addition Fibonacci ratios of Price / Time are also important. Currently the No. of points travelled / No. of days taken is 135.21which is exactly the important geometric degree.

We have shown such strong synchronization of techniques before during formation of bottom in January 2012, then during formation of top in January 2013 and now ……

There are enough technical evidences presented above that point to only 1 direction which is ………. probably by ………. but we still do not have ………

In short, we will now closely observe how prices move over next 3 days and if prices the only parameter pending gets in sync with other technical evidences else the alternative label will get into play….

There is more to the above technical parameters we have presented in today’s morning report. Such an astonishing synchronization of parameters cannot be coincidence. To know more aboutGeometric angles, Cycles, Elliott wave counts, Price ROC indicator, Channels and much more in one single report subscribe “The Financial Waves”. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty major trend continues to be down but short term positivity plausible!

The following is published in daily research report "The Financial Waves" by Waves Strategy Advisors. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Bottom Line: Nifty failed to take out the low created immediately after policy announcement. This indicates one minor push up pending!

Nifty daily chart:

Nifty 60 mins chart:

Nifty 20 mins:

Wave Analysis:

We mentioned in previous update, “In 2013, markets have closed negative on positive news and over past 2 times prices closed down on day of repo rate cut by RBI. 12 months Bond yield currently stands at 7.46% which we use to judge possibility of rate cuts….In short, we continue to look at current market as topping with first negative confirmation below 5910 followed by 5850 levels. Today’s close will provide more clues to the near term direction of the market.”

RBI cut repo rate by 25 bps for 3^rd time in this year and markets obliged by closing negative again on the day of monetary easing. As soon as the announcement was made Nifty made a low of 5930 but later recovered. There was high intraday volatility and after the announcement that there is little room for further monetary easing, market started rallying making day high at 6000 levels. This continues to indicate an up move on negative news and down move on positive news.

A very important observation on Friday is that even though Nifty closed down by 55 points on day of repo rate cut it has managed to protect the lows made at 5930 level immediately after the announcement. Prices turned volatile during the day but have constantly managed to protect 5930 level. A spike or panic low if not taken out during same day or next day it indicates supporting action and there is some potential left on upside.

A very close observation of wave structure as shown on 20 mins chart indicates that the move up from 5870 to 6020 took approximately 23 bars and prices have retraced only 61.8% of this up move in more than 23 bars. This clearly indicates that the minor trend is still positive and we can expect a push up towards 6040 levels.

Nifty 60 mins chart shows that prices are moving up in tipple corrective manner and prices are in minute wave c of 3^rd correction. There is clear loss of momentum and there is negative divergence with RSI indicator. Prices have also now moved from steeper channel to a channel with lesser angle. This indicates a transition phase during a topping process.

Sentiments have started turning positive exactly at wrong time with upside projection of 6300 to 6700 levels by many analysts and traders. This is exactly what has happened even before when markets were moving up in primary wave 5 before finally topping out near 6110. We look at this as negative sign from medium term perspective.

However over short term, Nifty daily chart shows that all the while from 5480 to recent high of 6020 prices have closed above the previous day’s low and have also managed to protect the important low at 5910 level mentioned in previous update indicating some more steam left on upside before turning down.

In short, failure of prices to start trending move on downside on day of policy announcement and protecting the lows at 5930 and 5910 our bias continues to be positive. However we are looking this move as topping and not as start of new leg on upside as long as close is below 6110 level. Next target zone for this up move is anywhere near 6040 to 6070 levels. A move below 5910 will provide first negative confirmation that down move towards 5640 has started.

To get view on stocks on daily basis subscribe to the daily equity research report. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

RBI Monetary policy - Impact on Banking Stocks!

RBI Monetary policy - Impact on Banking Stocks!

By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

RBI cuts repo rate on 3^rd May 2013 by 25 bps which was in line with many of the economist and market experts but does monetary policy drive stock prices?

In morning research update sent to our clients we mentioned the following, “In 2013, markets have closed negative on positive news and over past 2 times prices closed down on day of repo rate cut by RBI. 12 months Bond yield currently stands at 7.46% which we use to judge possibility of rate cuts. This yield indicates a possibility of 25 bps cut in repo rate at maximum and also a probability of no repo rate cut. In previous policy meeting a very important top was made at 6110 on policy day and ……..”

We continue to believe that events do not drive prices of stocks and result only in short term spikes and eventually the original trend resumes. The below article gives overview about Banking stock SBI irrespective of the monetary policy announcement -

SBI 120 mins chart:

Waves Analysis:

As shown on 120 mins chart, currently prices are at crucial juncture as it is quoting at 61.8%retracement of the previous down move (2550-1970). A move below 2225 will infuse selling pressure which can drag prices lower till ….. which is 61.8% retracement of the previous up move (1970-2360). However, a move above ………..

In published report, we have shown daily chart of SBI along with explanation to give the overall trend outlook in addition to short term 120 mins chart.

As per wave theory, prices completed wave (A) in the form of double zigzag pattern at 1970 and it is currently moving higher in the form of wave …..

In short, prices are currently at important juncture. A move below 2225 will confirm a short term top is in place whereas a close above ……… will open more upside possibility.

The above chart and explanation clearly indicates that the stock has moved exactly as per its trend irrespective of the monetary announcement. Prices are currently quoting at 2230 exactly at the support shown on the chart above. A closing will provide more clues on the overall trend for this banking heavy weight. 

Do not trade based on partial information but trade objectively and know crucial risk management levels. “The Financial Waves” daily equity research report gives holistic view on Nifty and different stocks.

By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty: An Exhaustion Gap TODAY? Next Trading Strategy!!!

Nifty: An Exhaustion Gap TODAY? Next Trading Strategy!!!

By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

An Exhaustion Gap is a gap that occurs after a sustained rally and is normally a 3^rd or 4^th Gap in anupmove. First confirmation that the Gap is of exhaustion nature and not run away Gap is obtained once the Gap is filled either on the same day or next day.

Post pattern implication of this pattern is that the next leg will probably start on downside oratleast sideways action is expected for few days.

A classical example of this exhaustion Gap can be seen on Nifty where prices opened today with almost 50 points Gap up and closed the Gap within first few hours of trading.

Nifty past history: WhenNifty was making a high near 6050 – 6100 in late January we warned our subscribers of a very important top is in place for months to come and not to get carried away in the euphoria. We projected 5550 to 5600 as our target area on downside. Nifty made a lowof5470 on 10^th April.

10^th April 2013:We published an intermediate report during market hours that stated - Nifty has managed to show good reversal from the bottom and has so far retraced the down leg in faster time. This indicates that the short term bottom is probably in place. Please have minimum positions on short side and if prices manage to close above 5600 then exit all your short positions.

Happened:Nifty has till date protected the lows of 5470made on 10^th April exactly as expected.

17^th April 2013: We used Fractal nature to predict the up move from 5600 and stated the following - It was on January 07, 2012 we predicted an up move towards 5650 from 4650 based on the setup, which happened and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output.

Happened: Nifty spot made a high of 5963 within the target zone of 5900 – 5970 we have been mentioning since past week.Nifty: An Exhaustion Gap TODAY? Next Trading Strategy!!!

An Exhaustion Gap is a gap that occurs after a sustained rally and is normally a 3^rd or 4^th Gap in an upmove. First confirmation that the Gap is of exhaustion nature and not run away Gap is obtained once the Gap is filled either on the same day or next day.

Post pattern implication of this pattern is that the next leg will probably start on downside oratleast sideways action is expected for few days.

A classical example of this exhaustion Gap can be seen on Nifty where prices opened today with almost 50 points Gap up and closed the Gap within first few hours of trading.

Nifty past history: WhenNifty was making a high near 6050 – 6100 in late January we warned our subscribers of a very important top is in place for months to come and not to get carried away in the euphoria. We projected 5550 to 5600 as our target area on downside. Nifty made a lowof5470 on 10^th April.

10^th April 2013:We published an intermediate report during market hours that stated - Nifty has managed to show good reversal from the bottom and has so far retraced the down leg in faster time. This indicates that the short term bottom is probably in place. Please have minimum positions on short side and if prices manage to close above 5600 then exit all your short positions.

Happened:Nifty has till date protected the lows of 5470made on 10^th April exactly as expected.

17^th April 2013: We used Fractal nature to predict the up move from 5600 and stated the following - It was on January 07, 2012 we predicted an up move towards 5650 from 4650 based on the setup, which happened and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output.

Happened: Nifty spot made a high of 5963 within the target zone of 5900 – 5970 we have been mentioning since past week.

Following chart was published today morning along with Nifty daily chart and Advance decline chart (not shown here)

Wave Analysis:

NSE Advance decline ratio (shown in today’s morning report)is providing some very interesting observation. There was a classical positive divergence when Nifty moved from 5650 to 5470 levels and Advance decline ratio did not make new lows. However, the up move from 5470 to current levels shows a strong negative divergence with Nifty where Nifty has crossed above its previous pivot level of 5750 whereas Advance decline ratio has been constantly failing to show any improvement. This further conforms to the outlook that the current up move is simply corrective and not start of strong uptrend.

From wave perspective, we think the current up move is wave a of ………….

In short, we continue to expect sideways action between the range of ……….. and 5950 levels over short term before the downside correction starts.

Nifty made a high of 5962 and reversed from there and made a low of 5868 from there which is almost a 95 points fall from the top so far…

To know what is next from here subscribe now to “The Financial Waves” and get insight not only in Nifty but also on Bank Nifty, Midcap indices and stocks that supports our view.

By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty moved exactly as Fractal Nature & Elliott wave suggested!!!

Nifty moved exactly as Fractal Nature & Elliott wave suggested!!!

By Waves Strategy Advisors, For information on various research reports visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

We published an article on Nifty: Using Fractal nature to predict future price action on 17^th April 2013. 

Nifty was trading at 5680 then. We compared Nifty Fractal pattern to that of January 2012 rally and mentioned that if our Fractal analysis is correct prices can have similar post pattern implication and should move towards 5900 – 5950 levels. Nifty spot has made a high of 5909 as of now in just 5 trading days.

Recent sharp move on upside from 5545 level might be surprise for many market participants but our subscribers were aware of this pattern and prices have moved exactly like that. The below charts explains it all and requires little justification!

Nifty chart: picked from 27th February 2012

Nifty daily chart:

Anticipated on 17^th April 2013:

Happened as of today 25^th April 2013, 1:30 pm

We have mentioned in the report of 17^th April 2013, “Indian markets are constantly exhibiting good fractal nature. We are showing a chart picked up from the 27^th February 2012 report that showed a very similar setup that the current chart is showing. A wedge shaped formation was clearly seen near the end of fall of 2011 just before the rally and wave e of the wedge pattern was truncated ……………. and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output”.

Happened:Nifty Fractal Nature worked precisely as expected. Prices made a high of 5909 as of now within the expected zone of 5900 – 5950!!!

Do not get carried away in euphoria and start creating long positions when we expect the move to be in matured up trend. You will start hearing strong positive news as soon as Nifty reaches 5950 levels exactly at the wrong time… The daily research report “The Financial Waves” gives objective reasons justified using technical analysis and Elliott wave analysis for future price action of Indian markets and stocks. See the magic of price patterns as it unfolds before you!!!  

To subscribe to daily research report "The Financial Waves" visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202

Relation between Infosys results, Satyam Scandal, Japan Tsunami !!!

Relation between Infosys results, Satyam Scandal, Japan Tsunami !!!

By Waves Strategy Advisors, For information on various research reports visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Infosys results were declared on 12^th April 2013. 

Infosys fourth quarter net profit rose 3 percent year-on-year  (1 percent quarter-on-quarter) to Rs 2,394 crore, helped by higher other income and lower income tax expenses. The stock had a gap down opening of nearly 15%. Nifty on that day was down by 80 points and 75 points was due to Infosys. Nifty made a low of 5494 on that day but failed to breach its previous low of 5477 which was made on 10^th April 2013. Markets managed to protect the lows and started rallying from very next day as shown in below chart!

Nifty daily chart: Last updated 17^th April 2013

Satyam Scandal - Nifty daily chart 2008 - 2009

Satyam Scandal: A very similar event occurred 4 years back when we came across the SatyamScandal. The Scandal came in early 2009 where IT major Satyam Computer Services’s explosive revelations send the market on a southward spiral. Satyam’s shares plunged 77.69% in a single trading session on 7 January 2009, as chairman Ramalinga Raju resigned after announcing during trading hours that the company’s accounts were inflated. The shocking revelation of the accounting fraud, estimated at about Rs 7000 crore, sent the BSE 30-share Sensex tumbling 7.25% on that day. Interestingly in this case, again Indian markets managed to protect its previous low of 2008 and later started the uptrend.

Nikkei 225 (Japan) daily chart 2008 - 2009

Japan experienced one of the worst Tsunami and earthquake in 2011. The equity index of Japan Nikkei 225 clearly shows reaction to the event. In this case as well event did create lows but later market immediately reversed and resumed the original direction protecting the lows created.

Case in point: We believe that event does not determine the direction of the market but can produce only short term spikes that can last from few minutes to hours to few days but the original trend eventually resumes. Also a common thing betweenInfosys andSatyam is that both the events resulted in down move but that managed to protect the immediately preceding pivot lows. In case of Japan, equity markets quickly recovered after the event and prices rallied back towards the level before the event and then resumed its original trend.

It is therefore important not to trade based on news or event as they will be opposite exactly at the wrong time. Even this time Infosys results turned most of the people bearish exactly when we expected an important short term lows in Indian markets.

Do not get carried away by news but apply Elliott wave patterns and technical studies that helps us to be objective and trade in correct direction of the trend. Our daily research reports on Equity, Commodity and Currency markets provides detailed technical charts and explanation that justifies our stand objectively!!!

By Waves Strategy Advisors, For information on various research reports visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com