Friday, June 29, 2012

Nifty started next leg up!

Bottom Line: Nifty has managed to cross above the crucial level of 5200 with a Gap. We have always said strong resistance and supports get taken out with Gaps and this indicates beginning of next leg up. If our wave analysis is right Nifty can head towards 5600+ on the assumption that wave iii can be extended. However conservative targets still come around 5400 levels. It is now extremely crucial that today’s gap remains unfilled and please trail your stops towards 5150!

Thursday, June 28, 2012

Nifty continues to move in lackluster fashion!

Bottom Line: Nifty continues to move in lackluster fashion and trade in a range of 5090 and 5170.

Nifty Daily chart:

Nifty 60 mins chart:

Wave Analysis:

Nifty continues to move in lackluster fashion as expected. Prices had a gap up opening and moved towards the 5160 levels. However there was no follow-up rally during second half of the session and moved in a narrow range between 5130 – 5160.

Indian markets have been testing the patience of traders and making it a tiring and boring trading environment. It is important to be objective during such scenarios as boredom produces an emotional flux resulting into over leverage. There are times when it is better to wait for clear direction to emerge before betting on either side.

Today being an expiry day there can some volatility seen. Last few expiries have seen a narrow move on the day, so we will not be surprised if market continues to move between 5090 and 5170 levels.

As seen on daily chart, we can see a Doji formation (open and close) at same levels. It is important to see follow-up action after Doji formation. A move below yesterday’s low of 5129 will give bearish implication and a move above 5160 will give short term positivity.

Time-wise correction is still pending and market can move like this for next 4 to 5 days before the next leg up starts.

In short, a break below yesterday’s low of 5129 can take prices towards 5095 levels. Any move below 5090 will open up possibilities for 5040. For medium term positivity it is important for prices to close above 5195 – 5200 levels.

Wednesday, June 27, 2012

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Monday, June 25, 2012

Nifty forming base before next leg up!

Bottom Line: Nifty needs to cross above 5180 - 5190 level for opening up wave iii on upside.

Nifty Daily chart:

 Nifty 60 mins chart:
Scenario 1:

Alternative 2:

 Wave Analysis:

We mentioned in our previous report that, “In short, a close above 5190 will be strongly positive and will open up wave iii towards 5600 or higher whereas any move below 5090 will indicate the correction is not yet complete. A day or 2 of action will be important to observe.”

Nifty made a low of 5094 and turned exactly from the level we have mentioned as crucial support.

Prices continue to move in wave ii as shown on 60 mins chart. Nifty had a gap down opening on Friday given the strong selloff in world equity markets but prices managed to recover back smartly during second half of the day. Midcap and Smallcap index both closed positive and good strength was seen in high beta stocks. On weekly basis, Nifty closed almost at same level compared to last Friday and shows no impact of bad news. This is positive.

We have been mentioning since the start of up leg from 4850 levels to use trailing stop method as there can be strong uptrend ahead towards 5600 + levels. For positional longs we mentioned to use 5030 as stop loss and over past entire week of correction this level was not taken out. Infact as seen on 60 mins chart prices have retraced merely 23.6% of the prior up leg and this indicates strong resilience to the downside. Significant sell off in global markets impacted Indian markets only momentarily and prices managed to close the gap down opening during later hours of trade.

Sharp depreciation seen in Indian Rupee will be impacting equity market adversely is the talk of the town. But the correlation is little low as of now and Nifty has rallied from the low of 4770 towards 5180 levels whereas Rupee has depreciated at the same time. A 3rd leg up in Nifty will result into appreciation of INR. However it is important to wait for confirmation on Nifty above 5185 – 5190 and a break of 56.40 in INR on downside will indicate positivity for Indian rupee (i.e. USDINR should move down).

In short, a move above 5185 – 5190 will be strongly positive for Nifty and high beta sectors /stocks have already started showing resumption of uptrend. As long as 5090 is intact on downside the uptrend can start anytime now…

Monday, June 18, 2012

Waves Strategy Advisors: Nifty scenario analysis!

Bottom Line: Nifty continues to move in overlapping formation. Break of crucial levels are required for further direction!

Nifty Daily chart:

Nifty 60 mins chart:
Scenario 1:

Alternative scenario 2:

Alternative 3:

Wave Analysis:

We mentioned in previous update, “Existing long positions can use 5030 as stop loss on closing basis. A move below it can take prices towards 4960 as mentioned earlier. There is lot of events lined up over next few days. RBI monetary policy on Monday can result in high volatility on intraday basis. Greece election result over the weekend might produce gapping action on Monday.”

Nifty continues to move in a challenging fashion with no clear direction over past few days. Prices are moving in 1 day up 1 day down movement which we have observed before during down move of 2011. It is better to stay on sidelines during such movements as it will produce flux of emotions on both direction and making it difficult from trading perspective.

We are showing couple of probable wave counts. Scenario 1 indicates that wave v is over at the high of 5145 and prices have started wave ii on downward direction, probably forming a flat correction.

Scenario 2 shows that wave v is still ongoing probably in the form of ending diagonal pattern and might get completed near 5160 – 5170 levels.

Scenario 3 shows that wave 1 was completed at the high of 5050 and wave 2 has been correcting wave 1 in the form of running correction with 1 minute leg c pending on downside.

Either of the scenarios is indicating atleast one minor leg down is pending. However we do acknowledge the fact that the major trend is up and if momentum gains on upside direction that will indicate wave 2 is over at the low of 5050. A move above 5170 – 5180 will force us to adopt the possibility that next leg up has started.

The advance decline ratio is not so strong that we normally see before strong up moves and midcap & smallcap indices were positive by mere 0.5% which normally outperform major index during good rally.

It will be important to see the reaction on RBI monetary policy on Monday and it is advisable to follow the levels on closing basis.

In short, longs can maintain the trailing stop of 5030 levels. A move above 5180 will indicate wave 2 is over and next leg up has started. Next few days of price action will clarify which of the above probable scenarios are under formation.

Wednesday, June 13, 2012

Nifty headed towards 5600+

Bottom Line: Indian markets managed to close strong despite poor IIP data. Positive reaction to bad news indicates inherent strength!

Nifty Daily chart:

Nifty 60 mins chart:

Wave Analysis:

Nifty continued to show strength despite poor IIP data that was published yesterday. Positive reaction to bad news indicates inherent strength.

As shown on daily chart, Nifty has managed to give a close above the downward sloping trend channel since February 2012. This further provides positive confirmation that Indian markets are headed towards 5700 levels we have been talking about for sometime.

The medium term positivity should remain as long as prices do not retrace the up move from 4780 to current levels in faster time. The current up trend is now 6 days old and index has broken the 3 to 4 days reversal pattern seen in the correction from February 2012.

Nifty 200 days moving average comes near 5100 and prices have managed to close above it.

The shorter time scale chart is not showing any divergence as yet and there is no sign of reversal for now. We will not be surprised to see this trend goes up without halting at any resistance levels between 5120 - 5200 since impulsive waves can sometimes be very violent. Also as we always mention important resistance or support levels are usually taken out in gapping action.

Existing long positions can now trail their stops towards 5030 and it will now be very well in the money.

In short, the trend continues to be firmly up as long as 5030 is intact on downside. Any break below this will indicate correction of the up move from 4780 to 5125 has started. However the bigger trend remains positive and any dips shall be used as buying opportunity.

Monday, June 11, 2012

Nifty: Next leg up towards 5600 or higher!!!

Waves Strategy Advisors Pvt. Ltd.: The Financial Waves research report that was published today morning before 8.30 am and has been giving bullish outlook over last entire week. Please write on for subscribing today or if you would like to have a glance into last week's report! This steep move up has been surprise to many but not to the readers of Financial Waves Short term update.

Bottom Line: Nifty had one of the best weekly closes since the correction that started in February 2012!
Nifty Daily chart:

Nifty 60 mins chart:

 Bank Nifty Daily chart:

Wave Analysis:

We mentioned in our previous update that, “The bias remains positive and gapping action indicates impulsive behavior. The faster retracement above 5020 provided first positive confirmation that short to medium term trend has probably changed towards upside. A close above 5120 will break the strong channel on upside thereby providing second confirmation.”

Nifty showed one of the best performing weeks since the correction started in February 2012. Prices managed to rally by more than 300 points in just a week. This is no surprise to our readers since we have been expecting a rally atleast till 5100 levels. Though we expected this rally in corrective form but it has all the ingredients of impulsive pattern so far. Wednesday had a gap up action followed by strong day on Thursday. On Friday prices opened gap down but closed the gap on intraday basis and closed positive. Gapping action alone provides vital information and is indicating positivity.

Nifty has now come close to the resistance zone of 5120 – 5200. It is imperative to see how prices react from here. A move above 5100 will break the downward sloping trendline which is very important. Global markets are showing strength and are supporting the positive outlook.

Midcap and Smallcap index has however lagged the rally so far. Bank Nifty index is also lying at crucial juncture as shown. A close above 10050 will provide positive confirmation from Bank Nifty.

We would advise our readers to follow a trailing stop loss method. If this is a start of next leg up Nifty can now move up towards 5600 or higher. 4990 is now an important pivot level and please trail your stops for long positions to this level.

In short, the bias is positive as long as 4990 is intact on the downside. A move below 4990 will indicate prices are simply correcting the entire move up from 4770 – 5080 before moving up again. A move above 5100 – 5120 will provide further positive confirmation.

Tuesday, June 5, 2012

Waves Strategy Advisors

We would like to inform you that Waves Capital has been dissolved and will seize to exist. The new independent company Waves Strategy Advisors Pvt. Ltd. has been formed under the leadership of veteran Ashish Kyal, CMT. Ashish Kyal is a founder of Waves Capital and now Waves Strategy Advisors Pvt. Ltd. He is a Chartered Market Technician  (MTA - USA) and is a frequent speaker on CNBC TV18. He believes in providing quality research by applying complex / advanced techniques like Elliott waves / Time cycles / basic patterns and indicators, in a language that is understood by a reader who is not necessarily from this field of work.

The new website "" will be soon up and loaded with important educational information and free articles that will provide information in a systematic and user friendly manner.

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