Monday, February 24, 2014

Bank Nifty Elliott wave counts and trend ahead!

Bank Nifty is one of the indexes which has underperformed Nifty since May 2013.
If we just compare the charts of Nifty and Bank Nifty, then Nifty is consolidating between the range of 5900 and 6350 since November 2013, whereas Bank nifty is clearly moving in lower highs lower lows pattern from the start of December 2013.Before 2 months, prices were trading at 12250 levels , however, recently it has retraced 61.8% of prior up move, made a low near 10000 levels and bounced back on upside. Now, the question arises that, whether underperformance of Bank nifty will continue or more upside is possible from the current level?
We have been applying Elliott wave theory along with basic technical analysis to know the next short to medium term trend ahead.
Below we have shown part of research taken from “The Financial Waves STU” which was published in today’s morning report.

Bank Nifty Daily chart: 

Bank Nifty 60 mins chart:

           Wave Analysis:

As seen above in daily chart, after completing wave B near 12200 have moved lower, breached the wedge pattern on downside and retraced exactly 61.8% of the prior up move from 8400 to 12200. 61.8% is an important retracement level. Also momentum indicator RSI has turned from the support of 30. This indicates the positivity over short term before it resumes the downtrend.

As shown in 60 mins chart, in the start of February 2014 prices found support near lower end of the channel and bounced back on upside. In past 6 trading sessions we have observed an up move in major index Nifty. Bank Nifty is currently moving along with Nifty and has been outperforming during this period. Thus there is high probability of prices to break the channel on upside and continue the uptrend.

As per wave theory, sharp move on upside suggested the end of simple correction a-b-c and currently prices are moving higher in the form of wave x. Wave x has retraced 50% of the prior wave c. A move above 10600 will break the channel and open further positive possibilities. This scenario remains valid as long as 10100 is intact on downside.

In short, move above previous high of 10600 will take prices higher towards 10900/11000 where 76.4% retracement is placed. However, move below 10300 will result into range bound movement.

The above research is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. This research report has view and outlook on Nifty with 3 stocks short to medium term. For subscription option please visit or any other details Contact at or on +91 22 28831358 / +91 9920422202

No comments:

Post a Comment