Thursday, April 10, 2014

Nifty Fractal nature and impulse wave possibility

The below gist is a part of "The Financial Waves short term update" published today morning. To view the complete report with detailed analysis and Elliott wave counts subscribe now by visiting 

Bottom Line: Nifty showed strong momentum yesterday and closed at life time high levels. If this is indeed an impulse wave the rally should continue atleast for few weeks more from here!

 Nifty 60 mins chart:

Nifty 60 mins: Scenario 3 - Strong Bullish possibility

Wave Analysis:

Nifty had a Gap up opening of nearly 30 points and prices managed to protect the Gap which is seen after a long time. As mentioned earlier there was never a Gap up opening which was not filled until yesterday. The strong performance was seen in the 2nd half when the index rallied by almost 100 points in mere few hours and decisively took out 6775 levels on closing basis. The strong momentum seen yesterday along with Midcap and Small sectors up by more than 2% is suggesting there is much more room left on upside and understanding different scenarios has become extremely crucial.

The weekly chart with 2 possibilities ......Nifty daily chart shows 2 different plausible counts.  (shown in actual report)

Nifty 60 mins chart shows all the 3 different scenarios very clearly. The 1st chart shows either an ongoing complex correction or an impulsive move and wave v has started. The problem with this Scenario 2 is that both waves ii and iv are very similar running correction. 

Fractal Structure: The structure and pattern looks exactly same and such behavior is known as Fractal nature of markets. For a valid impulse structure wave ii and wave iv should alternate in as many ways as possible and over here there is only time alternation i.e. wave iv has taken more time compared to wave ii but the pattern, complexity and structure looks very similar. This increases the odds and need for Scenario 3 details of which are as follows:

Scenario 3: This is a very important scenario and is fitting the confusing environment very well. In our previous update we highlighted about a possibility of running correction. There is high likelihood that this running correction is wave 2 and wave 3 on upside has just started. Also none of the indicators were giving buy signal because wave b of 2 was ongoing in form of running correction (A running correction has wave b traveling much beyond end of wave a and wave c truncating above the start of wave a). Also this wave b of 2 produced strong negative divergences on hourly scale and market obliged by falling from near 6750 to 6650 levels (however minor the fall is the indicator did produce its impact and now its outcome is complete). Minor wave c was only 100 points which was retraced yesterday in merely 3 hours. The indicators didn’t give buy signals all the while from 6550 to 6750 as the momentum was slow and overlapping as it was wave b. This synchronizes the indicators, channeling move and wave counts. Also wave 2 has taken exactly same time to the point as wave 1. So if this is indeed start of wave 3 next 1 week should see strong Gap up moves which are unfilled during the day. 

From trading perspective, ............In a nutshell, the short term trend is ......................

To see the detailed analysis on Nifty and 3 different scenarios along with stocks like Reliance Industries that is not in news for its movement but probably will be the next leader subscribe to "The Financial Waves short term update" daily research report by visiting or Contact US

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