Wednesday, April 17, 2013

Nifty: Using Fractal Nature to predict the future price action!

Following was published in today's morning report "The Financial Waves" by Waves Strategy Advisors. This research is published everyday morning before market opens. For more information visit or write to
The “Fractal Nature” is an important concept which states that repeatable patterns occur on varied time scales and can be seen on 1 minute charts to Daily charts to Monthly charts. 
We have shown such Fractal nature in Indian markets from time and again. This simply confirms that everything in this world is symmetrical & patterned and there is no place for randomness to exist for extended period of time.
Below charts of Nifty shows a clear Fractal nature visible between the current chart and 2011 bottom pattern formation!
Nifty daily chart:

Nifty chart: picked from 27th February 2012

Wave Analysis:
The following was published in the morning research report “The Financial Waves”
We mentioned in previous update, “If market protects prior lows after an event and continues sideways action this shows the prior trend is about to reverse. A similar behavior was observed when 2008 lows was formed which was very well protected after the Satyamscandal was disclosed and the trend changed to upside in 2009. However, that was of very big primary degree compared to the current minor degree….A move above 5600 will open positive possibilities towards 5750 or higher…”
Indian markets are constantly exhibiting good fractal nature. We are showing a chart picked up from the 27th 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 i.e. it ended above the end of wave c. Also the bigger fall was perfectly channelized. Similarly, the current fall has been within perfect channel along with wave e failing to move beyond the end of wave c. Both the charts show positive divergence and a sharp reversal on upside giving the breakout. 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 …………. 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.
Nifty finally managed to show a strong closing yesterday and 5600 was taken out quickly as soon as markets opened. The rally intensified further as soon as 5650 was broken on upside. Except IT all the sub indices closed positive.
Indian markets continue to move independent to the global equity markets and sharp drop in US and UK yesterday failed to show any impact. Also in entire 2013 markets have managed to rally on negative news whereas it has fallen on positive outcomes like repo rate cuts. Poor results byInfosys resulted in only a short term spike on major index and the rally started from the very next day.
Positional traders can now follow our trailing stop method and can now trail stops to ……….
In short, we continue to be bullish on Nifty as long as -------- is intact on downside for a move towards ------------!

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