Friday, December 6, 2013

Nifty:Understanding triple corrective pattern – Part II

We discussed about double corrective pattern previous Friday on Nifty. Here is the link of that article – Double correction by Waves Strategy Advisors. The below article highlights on triple corrective pattern.
Elliott wave Triple corrective pattern: As per this pattern 3 corrections are combined together with a corrective pattern in middle known as “x wave”. 1st set of correction is combined with 2ndset of correction which is in-turn connected with the 3rd set of correction with x wave joining them. So a triple zigzag correction is a-b-c-X-a-b-c-X-a-b-c.
The below chart shows 3 zigzag patterns connected together. The labeling can be w-x-y-x-z or a-b-c-X-a-b-c-X-a-b-c. Post pattern implication of a triple correction is that we can expect a move in opposite direction of around 61.8% to 80% once this correction is complete.
Nifty 60 mins chart:
In the above chart, we can see after completion of wave z of triple correction Nifty moved up from 5570 to near 6100 level where it touched 80% retracement to the point thereby achieving the post pattern target.
We can also see that before the downtrend started there was Head & Shoulder topping pattern as well. Elliott wave combines the traditional pattern as well and gives a powerful forecasting tool.
In daily research we always thrive to understand the patterns and apply it to the best of our ability. There are times when Elliott wave counts can be very tricky but future is probabilistic and we constantly thrive to read what markets are trying to communicate.
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