Monday, April 1, 2013

Nifty Elliott wave, Bollinger Bands®, RSI – Trading techniques

By Waves Strategy Advisors, For more information visit To subscribe to daily equity research “The Financial Waves” write to or call on +91 9920422202 / +91 22 28831358
Following excerpts are picked up from the past 1 week research report of “The Financial Waves”.The below gist clearly shows how we have been combining various basic and advanced technical concepts like Elliott wave, Channels, Bollinger Bands, RSI all together to derive the path ahead in Indian markets.
Following was published on 22nd March 2013 morning when Nifty was trading near 5650:
“Nifty made a low for the year at 5647 levels and also closed at day’s low. The trend continues to be bearish. Nifty 200 days Exponential moving average is broken and 200 days Simple Moving average is at 5614 levels. We think a move below this level will be sufficient to create strong bearish sentiment across the traders and prices will then start consolidating and later start upside correction of the entire move down from 6110 when it is least expected. …We will know when reversal happens but this time it should form a bottom reversal pattern instead of sharp reversal.”
Following was published on 28th March 2013 morning when Nifty was trading near 5640:
“Nifty had a Gap down opening of around 20 points but prices quickly recovered and closed the Gap. Also daily chart shows a blue bar after 7 consecutive red bars. As mentioned in previous update the last time we saw 7 consecutive red bars was in November 2012 during the formation of wave 4. As shown on daily chart, prices approached near the level of 5600 and we expect 5580 – 5600 to be important levels on downside. … prices have lost considerable momentum on downside over short term and there is series of positive divergence. In short, ….…..”
Happened: Nifty made a low of 5604 on last day of expiry and bounced back making a high of 5693 on the same day.
Following is the 60 mins chart along with daily chart (not shown here) published on 28thMarch before equity market opened:
Nifty 60 mins chart:
Happened: Nifty made a low of 5604 on last day of expiry i.e. on 28th March 2013 and rallied towards 5700 levels. Below chart explains it all!
Nifty 60 mins chart after close on 28th March 2013:
Following is published today morning before markets opened:
Nifty moved exactly as expected. We mentioned 2 days back that prices have breached 200 days Exponential Moving average and can breach 200 days Simple Moving average which was at 5614 then to create more bearish sentiments and should later reverse. Nifty made a low of 5604 on Friday and reversed sharply to end near day’s high of 5682 levels. Also prices came close to the level where wave c = wave a before reversing.
From medium term perspective, we think that an important top is in place at 6110 level made on 29th January 2013. The reason being is that wave ….. took ……. days to reach near 6110 and it took only ……….. days to retrace below …… happened on 21st March 2013. Faster retracement of previous up move suggests that the major trend has turned down.
We are using Bollinger Bands on 60 mins chart since there can be some sideways consolidation over next few days. Bollinger Bands levels play vital role in identifying turning points during sideways market. ….. As long as prices stay below this level we can expect a range bound movement between ………. Currently the upper end of the band is placed at 5700 and 5720 is also an important resistance level on upside.
Happened:Nifty made a high of 5720.95 and is currently quoting at 5685. It took temporary resistance exactly at level mentioned in morning.
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