Tuesday, June 24, 2014

Nifty: TRIN indicator, Elliott wave, Time cycles path ahead

Bottom Line: TRIN indicator shows lot of volume already gone into short side without producing any meaningful correction confirming that 1 leg is pending on upside.

The below research is picked up from 23rd June 2014 morning research report of "The Financial Waves short term update" by Waves Strategy Advisors. For daily view on Nifty and 3 different stocks with complete Elliott wave counts, Time Cycles, combination with indicators like RSI. For subscription visit http://www.wavesstrategy.com/index.php/store.html

Nifty daily chart: (as of 23rd June morning research report)


 Nifty 60 mins chart:    
Chart courtesy: icharts


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Wave Analysis:

In previous update we mentioned that In short, it has been almost 9 days of correction so far and a trend is due to start. Faster move above 7600 will provide 1st positive confirmation for a move towards 7800...

Nifty continued to show weakness on last day of the week and closed below the previous week’s low near 7510 levels. The trend has been range bound in entire last week and the correction has already taken 10 days now. We continue to believe that one leg on upside is pending which will complete the ongoing move from 6630 levels.

As shown on daily chart, it seems the entire of the current up move is probably wave c or wave 3 which is subdividing into 5 waves. Either of the scenarios is indicating that wave iv is ongoing and once it is complete we should see wave v towards 7800 levels. This wave v will also lead to negative divergence on daily RSI which will further confirm short term topping process. The probable path over next few weeks is shown above but it is prudent to wait for price confirmation above 7600 for a move towards 7800 levels. Also near those levels we will have to closely watch the momentum and overall participation. If it is strong the current leg can extend further but if the overall breadth continues to deteriorate it will indicate a final wave v before we move down back towards 7400 – 7250 levels. The ongoing structure also looks like a wedge shaped formation with each of the up legs getting smaller. Again, development of wave v will provide vital clues & confirmation to this pattern.

Coming to short term, wave iv is ongoing in the form of double corrective pattern enclosed within the red channel. Prices are on verge of completing wave c of iv and a faster retracement above 7600 followed by 7650 will confirm that the low at 7500 is in place.

TRIN indicator measures in which direction volumes have been moving and whether the conditions overbought or oversold. We can clearly see that this indicator is at the level last seen only in September 2013 before the rally started. This indicates that lot of volumes have already moved to short side but did not produce any meaningful correction. The indicator is now in oversold zone (it is opposite compared to RSI) and some relieving action is accepted. This will result into an up move from current levels on Nifty and down move on TRIN.

In short, the indicators and other parameters are suggesting that the correction should complete and we should see an upsurge in Nifty but the confirmation of the same will be obtained only above 7600 levels. On downside 7480 will act as an important support and break below it will extend the current correction towards 7450 – 7400 levels.

For daily view on Nifty and 3 different stocks with complete Elliott wave counts, Time Cycles, combination with indicators like RSI. For subscription visit http://www.wavesstrategy.com/index.php/store.html 

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