Fractal nature exists across the universe right from the DNA in human body to the galaxy.
A natural phenomenon so integral to us has to exist even in stock markets. As per this concept patterns are repeatable and make them predictable at different degrees of time. We applied this concept recently to Nifty and showed it on 11th August morning research report. Below will give detailed view on how we predicted Nifty 1st target zone towards 7910 levels using Fractals!
Nifty 60 mins chart: (Anticipated on 11th August)
Published on 11th August 2014 in morning research“The Financial Waves short term update”
Fractal Nature in stock markets:
As shown on 60 mins chart, the recent action is very similar to that seen during the fall of 8th July to 14th July with the spikes in between due to Budget. In the recent fall from the highs of 7750 as well there is spike seen on Thursday which is then completely retraced on same day followed by fall on Friday. This phenomenon is known as Fractal naturei.e. market repeat similar structure on different degrees. Going by this pattern comparison some consolidation or pull back cannot be ruled out.
Published on 13th August 2014:
As shown on 60 mins chart, the down move in form of wave c is Ending diagonal pattern as discussed before. Yesterday’s sharp reversal has opened the possibility that wave e is complete at the lows of 7600 on 11th August itself. This makes wave e small in terms of price compared to other legs but from time perspective it has still consumed 5 hours. If I remember correctly suchsimilar action was last seen during the up move of January 2012 where the previous leg ended in Ending diagonal pattern with wave e truncating in exactly similar fashion. It was however on a daily degree but we are seeing this on hourly degree currently. The post pattern implication at that time was the high exceeded by the factor of 23.6% of the prior down leg and if current leg indeed behaves in similar fashion then the high of immediate preceding leg at 7840 should be breached and we can reach atleast towards 7910 levels.
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