Tuesday, February 18, 2014

Nifty Elliott wave counts and short term trend!

The following research is picked up from "The Financial Waves short term update". It is a daily research report by Waves Strategy Advisors. For subscription options visit  http://www.wavesstrategy.com/index.php/store.html

Bottom Line: Nifty has managed to protect the weekly low made at 5933. Breakout from the range is important for clear direction.

Nifty daily chart:

Nifty 60 mins chart:
Wave Analysis:

In previous update we mentioned that “Due to interim Budget today, volatility can be high and closing will be important. Failure to close above 6100 or below 5980 will continue the sideways action.”

Nifty had a minor Gap up opening yesterday and prices stayed between 6100 and 6040 level throughout the day. There was minor spike on downside during the interim budgetary session that sounded more of an election campaign on what UPA government did over past 10 years than anything else. Index managed to close near the day’s high but still below 6105 level by closing.

As shown on daily chart, it is unclear as of now if the low made on 4th February near 5935 is where double corrective pattern in form of wave w ended or it completed near 5984 in form of truncation on Friday. For latter counts shown on above 60 mins chart, prices have to break above 6105 levels before today End of day. Failure to move above this level will open up a few probable scenarios like triangle or complex x wave is ongoing.

Prices have moved between a narrow range for 9 days now. It is due for a breakout either above 6100 or below 5950. Close above or below these levels will result into short term trending direction. Looking at the chart patterns of stocks it seems that majority of them are completing 5th wave and showing positive divergence after arriving at crucial levels.

As shown on 60 mins chart, prices are now near the upper end of the Bollinger Bands and failure to cross above 6105 today can result into subdued movement within the mentioned range. Such environment is challenging more from intraday trading perspective since it is unclear whether to bet on breakout or to follow the strategy of selling near resistance and buying near supports when markets are already in a range for 9 extended days after 8 days of down move.

In short, expect a breakout soon from this range. Close above 6105 can take prices towards 6200 – 6240 whereas any move below 5940 will result into resumption of downtrend. Wait for breakout for next trending opportunity!

The above was published in morning research report "The Financial Waves short term update" To see Nifty along with stocks short to medium term forecast visit http://www.wavesstrategy.com/index.php/store.html

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