Monday, June 30, 2014

Tech Mahindra: Trading the 5th Elliott wave pattern!

For Tech Mahindra, below chart is one of the perfect examples of how impulsive waves look like. 
When minor wave iv competed at 1980, we were waiting for prices to give positive price confirmation for the start of minor wave v. On 26th June 2014 we got confirmation and published the research on the same.
Tech Mahindra 120 mins chart: (Anticipated on 27th June 2014) 
Tech Mahindra 120 mins chart: (Happened on 30th June 2014)
Elliott Waves Analysis:
Anticipated on 27th June 2014:In past we have observed that whenever Nifty shows weakness,CNX IT picks momentum on upside. In yesterday’s trading session stocks like Tech Mahindra,WiproHCLTech were up more than 1.5%. In today’s report we have picked Tech Mahindra as it broke above its crucial resistance.
As shown on 120 mins chart, prices have again bounced back by taking support of 50 periods EMAhence till its intact we can expect prices to move higher. As per Wave perspective, prices completed minor wave iv at 1980 level and currently moving higher in wave v. The stock is also moving in rising blue channel which is adding to the positive scenario. Now, as long as 1980 is protected on downside trend remains positive over short to medium term.
In short, for Tech Mahindra our view is bullish. Any move above 2060will infuse buying pressure and prices can easily move towards 2100 level which is 61.8% of minor wave iii.
Happened: Tech Mahindra is already up and has now moved past 2100 level as well. The stock is currently quoting at 2150. So what should be trading strategyfrom here?
To ride the next wave in Nifty and stocks, subscribe to “The Financial Waves Short Term Update” that shows trading opportunity in stocks from short to medium term using Elliott wave, indicators like RSI, Channels, etc. Directly subscribe from the or Contact US at, +91 22 28831358 / +91 9920422202.

Friday, June 27, 2014

How to apply MACD, Time Cycles, DMI indicators on stocks?

In technical analysis there are more than 100 indicators that can be used and applied on stocks. 
But trust me most of the indicators gives similar output. It is better to stick with 3 to 4 indicators that you are most comfortable with and understand it completely. Many of the books and if you search online using Google search will give you very crude way to use these indicators for simply overbought or oversold conditions which are wrongly pre-defined as 70 and 30 levels on RSI. The reason I say these levels as incorrect because during strong bull trend RSI will easily reach 80 to 85 levels and during strong down trend RSI reading of 20 is fairly common. For optimum use of RSI try to see the levels from where RSI has turned previously or in short which level is acting as support and resistance – in a similar way we identify supports and resistances for stocks.
The below article highlights on how do we combined indicators like MACD, Time Cycles and advanced concepts like Directional Movement Indicator. The complete strategy is not revealed which is mentioned in today’s morning research report.
Kotak Bank Daily chart:
Wave Analysis:
As shown in Daily chart of Kotak Bank, since mid 2011 prices are well intact in the upward moving channel. Recently in mid June 2014 prices broke above the channel resistance near 910 levels, made a high near 960. But, after that prices were unable to sustain above the same and showed sharp down move in last few trading session. This down move has broken the black color channel support which was intact since start of 2014. This is suggesting that short term top is in place for Kotak Bank. We have applied various other tools which are giving warning signs at current level that up move from ……. is in danger.
Directional movement index (+) in blue color and Directional movement index (-) in red color is working very well. In the past we observed that whenever blue color line moves above red color line  prices showed strong move on upside on the other side whenever blue color line moves below red line prices have showed down move. In simple terms, crossover of blue and red color line is providing signal for buy and sell. At current level, ………
MACDThis indicator is showing negative divergence and also the red line has crossed below signal line. What does it mean?Indicators are suggesting weakness but is it right to take the trade based on Indicator? Absolutely not! It is imperative to look at price charts of shorter term duration to get good entry or exit levels along with Risk Reward ratio.
Time Cycle of 96 days: is working well to find out the top and bottom.
A detailed 120 mins chart is also shown in today’s morning report for Kotak Bank.Looking at short term indicators with crucial price levels is the key for successful trading and timing the markets.
To know what is next from here subscribe “The Financial Waves short term update” –a flagship product that covers Nifty and 3 different stocks on rotational basis, complete charts, indicators, applied Elliott wave and much more. The reports will be delivered daily in your mailbox and can also be accessed online. Visit for pricing options.

Thursday, June 26, 2014

Maruti: The Magic of Time Cycles!

Maruti is one of the stocks which we found to follow Time cycles very well. 
We took a step ahead and applied not just 1 cycle to understand important lows but a cluster of cycles together. The 1st chart shown above might look complex at face of it but the below detailed analysis of cycle will provide a simple outlook on why we are bullish on Maruti from short term perspective.
Below is the excerpt from today’s Financial Waves STU which is published before market open to our paid subscribers.
Maruti weekly chart:
Maruti hourly chart:
Cycle Analysis:
Weekly cycle analysis:As shown on weekly chart, the major low was formed in 2009 near 465 levels. From that level we have seen multifold increase in prices and an upmove towards 1737. This up move was then correction for nearly 4 years and a major low was formed not at 910 in early 2012 but at 1215 in mid of 2013. This entire move from low of 465 to the next major low of 1215 is comprised of 1 major cycle which is of 247 weeks. Previously when this major cycle bottomed we saw strong increase in prices and same thing is witnessed even now post September 2013. The next major low should kick in year 2018. So the major trend for Maruti is positive atleast for few more years. However, trading such a big cycle is challenging and we need to observe how smaller cycles are behaving.
Normally a big cycle is either comprised of 2 or 3 shorter term cycles. This concept is known as harmonicity. It is due to cycle synchronization i.e. cycle troughs are formed together and harmonious nature that prediction becomes possible. The low at 1215 is cycle lows of shorter durations as well. We will focus on the short term important cycle of 22 weeks. This cycle low was formed at 1215 in September 2013, then at 1540 in week of 31st Jan 2014 and later the bottoming date is right now. If this shorter duration cycle is working well then we should seeatleast an upside push from current levels towards the recent high of 2500 or probably towards 2550 levels.
Hourly cycle analysis:Trading can be challenging even using a 22 weeks cycle and so we come down to 53 hourly cycle shown on 60 mins chart. This chart clearly reflects important lows near the cycle period. Even this time,prices formed bottom at 2350 on 23rd June and bounced back from the cycle lows. The move on upside yesterday took out previous pivot high at 2440 and showed a sharp rise in final hour of trading. Many will attribute this rise towards news of excise duty butMaruti had its cycle due exactly before the news event. Trading using news can be as challenging as throwing a dart in the dark. It is better to use the objective tools at our disposal before taking any subjective decisions.
In short, the concept of Time cycles is very deep and we are simply trying to use this technical indicator combining it with channels and trendline break on upside to get objective outlook. This is now giving us an upside target of ……
To know detail analysis with the target of Maruti Subscribe to our Financial Waves Short Term Update now and get full research report with Nifty and 3 stocks analysis. To subscribe visit

Wednesday, June 25, 2014

Will Apple’s new smart device help its stock prices?

Apple Inc has been everyone’s favorite investment and has exponentially multiplied itself over the years.
After the split 1:3 around 90 levels the stock is back near to its all time high!
Apple chart:
As per the Elliott Wave perspective, prices completed primary wave III at 100 levels and since then moving in wave IV. Internal structure of primary wave IV suggests that it is probably forming flat correction (A-B-C) where intermediate wave A completed at 55 levels and thereafter moving higher in form wave B in which minor wave c is ongoing. Hence after completion of wave B, we expect the stock to move lower in intermediate wave C. Now, any move below 80 levels will suggest that intermediate wave c has started on downside whereas on upside 100 will be an important resistance.
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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

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 

Monday, June 23, 2014

Where is Indian Currency USDINR headed? The complex correction!

INR has been in news lately due to its depreciation against major currency pair and especially USD over past 1 month.
The movement on upside in USDINR was expected not because of any fundamental reasons but the simple concept of channels provided important reversal point. We have been expected 58 level to act as very important support and USDINR bounced back exactly from there!
The below chart of USDINR was published on 26th May 2014:
USDINR Weekly chart spot:
Happened so far: Rupee moved from lows near 58 to highs near 60.50 in less than a month
On 26th May morning research report following was mentioned:
USDINR has arrived at crucial support zone of 58which is the important channel support along with 61.8% retracement of the entire up move from 51.20 levels to the highs of near 69. This level of 51.20 was seen in October 2012 and this pair touched 69 in August 2013. Indian currency along with many Asian currencies was looked upon as near crisis similar to that seen in 1997. However, many were surprised on dramatic reversal from 69 but from Elliott wave perspective the high was exactly near 161.8% of previous move which confirmed completion of wave 3 of primary degree and wave iv is ongoing since many months now. USDINR has also arrived near very important channel support which is valid since 2012 onwards and can be clearly seen from the above weekly chart. As of now prices have not confirmed the reversal & 58 is the crucial level and should not be ignored.
As shown on weekly chart, in Friday’s trading session this currency pair was unable to take out previous day’s low and touched intraday high at 58.55 level.The reading on RSI is exactly near 30.This is the time when one should get cautious in case major reversal across asset class happens.
Happened: Rupee moved from lows near 58 to highs near 60.50 in less than a month…
To know where is USDINR headed from here on from short term to medium term horizon subscribe to the “The Forex Waves short term update” and see yourself why we have been expecting such sharp depreciation in INR against USD. Visit for subscription options or Contact us at +91 9920422202 / + 91 28831358 for more details, Mail us at
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Friday, June 20, 2014

Maruti and Tata Motors- Fractal Nature at its best!

Fractal Nature in simple terms is nothing but a mirror effect between asset classes at different time scale. 
Fundamental rule of Technical analysis is Fractal Nature. In whichever place in the world  people will go, Human behavior doesn’t change. i.e – whether one goes to US or India or anywhere else, each and every person looks happy in good mood and vice versa. In panic situation too, people reacts in very predictable manner.
Freely traded markets reflect all this emotions. i.e- stock market. One can analyze the social mood while just looking at the charts. Stock markets always lead the crowd and past Human prints will guide for what can happen in future. One can analyze the same through understanding patterns and other techniques.  All the social media and the News shows what has happened in the past and one of the Fundamental point of market behavior is that it always discounts the past and look for the future. Price is supreme element for any asset class because it simply suggest us the value in real terms in real time.
Maruti Weekly chart:
Tata Motors 60 mins chart:
Above we have shown Maruti and Tata motors which exhibits the same structure. We can see that, time frame of Maruti is on weekly chart whereas time frame of Tata motors is on Hourly scale. Now, look at the patterns, both of this looks very similar. After completion of this pattern, Marutihas showed sharp up move and currently trading at lifetime highs. So, what can be post effect of this pattern in Tata Motors. To know the short to medium term trend along with important level, subscribe to “The Financial Waves Short Term Update”which includes Nifty and 3 stocks. For more information, visit 

Thursday, June 19, 2014

IRAQ issue: Is it really impacting Indian equity markets?

Nifty has shown unprecedented movement from the lows of 5980 to the highs of 7700 just last week.
This strong rally was supposed to be on hopes or expectations of change in central government. The market was proved correct and BJP won with clear majority. Post election outcome as well the index continued to move higher – this time the reason given was execution of projects, Budgetary expectations and Mr. Modi slogan of “Ache Din AA Gaye”.  But try to digest this: Nifty and Sensexclosed circuit up in 2009 post UPA came to power with majority. There has been lot of scandals and scams revealed over their tenure but still Nifty managed to protect the Gap up area. Now a radical change in central government is being perceived as good for economy. But irrespective of the government at the center Indian markets have continued its decade’s long rally since 1979.
Now coming to Iraq news:
Growing unrest in Iraq threatens to put the brakes on the post-election rally in India, as investors weigh the potential impact of higher energy prices on economies across Asia – Financial Times
India is one of the most vulnerable countries in Asia to rising prices because it relies on imports to meet about 75 per cent of its oil needs.”
If IRAQ issue is responsible for higher Crude oil prices which in turn impacts our economy negatively then please go ahead and explain the below movement of Sensex and Crude. It does not need statistics to see more positive correlation rather than negative:
Sensex and Crude chart:

Things that seem logical are not always true. Take a step ahead and you will know the fact. The following is published in today’s morning research report “The Financial Waves short term update”
Yesterday’s move had been crazy with all blame going to Iraq issue which is widely known for quite sometime and it also seems like impacting only India let alone rest of the world markets. Another major issue being talked about is Oil prices but Nymex Crude was relatively stablewhen the sharp selloff on Nifty started and MCX Crude rose due to depreciation in INR rather than any external event. Such news sound logical but are not necessarily the reason for sharp movements. Also there has been lot of talks about fiscal deficit due to rising Crude prices but a simply math of percentage change over past many years will show that Nifty and Crude actually has very high positive correlation rather than negative. Crude prices rose along with Indian markets all the while but media emphasizes on news without much statistical justification!
It is therefore necessary to use other methods that can provide logical reasoning to the movements of market: Below is a small gist of Elliott wave – An advanced technical analysisconcept explained:
Looking at the Elliott wave pattern it seems the correction that started from 7700 is still ongoing in the form of wave iv. This wave is probably developing as a double corrective pattern as shown on short term chart. Sharp movement within a range can also indicate a triangle formation but as of now double corrective pattern looks more probable. Once the correction is complete the major trend should resume!
To see yourself why we still think some steam is left in Indian Equity markets amid the Iraq crisis subscribe to“The Financial Waves short term update” and see the patterns yourself. For subscription options visit

Monday, June 16, 2014

Nifty: Time cycle day and crucial support near 7500 zone!

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Bottom Line: Nifty had a sharp fall below 7580 level in last day of the week. The trend reversal confirmation will be obtained only on lower high and lower low formation.

Nifty daily chart:

Nifty 60 mins chart:    
Elliott Wave Analysis:

On Friday, Nifty traded in a narrow range during the opening hours but selling pressure started to build up post 12 pm. The breadth slowly started deteriorating and as soon as 7580 level was broken there was sharp selloff across the board with prices making a low of 7525 during the day.

On weekly basis, Nifty has still managed to form a higher high low bar which will keep the medium term trend positive as of now. A close below 7500 by end of current week will indicate a reversal.

Looking at the options, there is highest Call OI buildup at 7800 levels and highest Put OI buildup at 7500 levels. So this can be the ideal range between which we should see the movement. Nifty closed very near to the lower end of the range at 7542. Move back above 7600 can generate buying interest but protecting 7500 on downside will be very crucial.

The Time cycle of 49 days is due today and it is unclear if this cycle has already formed a top now on Friday or will form a bottom. A sharp reversal from here will indicate bottom formation whereas continued selling pressure and a clear lower high and lower low formation will indicate a top is formed.

Nifty has now broken below the short term blue channel but at the same time RSI has arrived near the support of 30. So even if the downtrend has to continue short term pull back cannot be ruled out. A lower high and lower low formation on hourly chart is an ideal scenario to confirm trend reversal. So far by break of channel and 7580 level prices have formed lower low but has not yet formed lower highs a precursor for trend reversal. We have seen before as well that break of channel has failed to generate selling pressure unless a lower high is formed. So if prices show temporary upside pull back and does not move above last week’s high followed by break below 7500 it will give an ideal trend reversal confirmation.

In short, next 2 to 3 days will be important. A reversal back above 7650 will resume the uptrend whereas break below 7500 which is also the previous Gap area can keep the short term trend negative but as indicators are in oversold state some relief rally is plausible.   

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Friday, June 13, 2014

NSE Midcap Impulsive possibility as per Elliott wave

The below research is picked up from "The Financial Waves short term update" published on 12th June morning before markets opened. 

NSE Midcap index has strongly outperformed over past few months. Following chart clearly shows the up move.

NSE Midcap Index Weekly chart:

NSE Midcap Index Daily chart:
Waves Analysis:

NSE Midcap has shown strong performance since the start of September 2013 and has continued the same till now. In the period from the 2008 to mid 2013, this was one of the sectors which was underperforming. But from September 2013 there is change in performance cycle and more buying interest has been seen is riskier assets. In this environment it becomes important to know what is the long term trend as per Elliott wave theory for Midcap index.

As shown in Weekly chart, same as Bank Nifty, from the start of 2008 prices were moving in the triangle pattern in from of [A]-[B]-[C]-[D]-[E]. In this intermediate wave [E] completed at 6330. The rally which started in the month of September 2013 is clearly impulsive in nature and it has also taken out the high of 2008. This increases the probability that next major bull trend has started in this index.

As shown in Daily chart, intermediate wave 2 completed at 7440 and since then prices are moving in form of intermediate wave 3. Internal structure of the same suggests that minor wave v is ongoing Now on downside 10500 will act as an important support.

In short, short to medium term trend remains up for Midcap Index. Any move above 11120 will take prices towards 11500 where minor wave v = wave i.

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Thursday, June 12, 2014

Bank Nifty Elliott wave, Channels, pivot levels!

Below is the chart of Bank Nifty. For daily research reports subscription please visit for subscription options

Bank Nifty Daily chart: 

Bank Nifty 60 mins chart:

           Wave Analysis:

For Bank Nifty, on 8th May 2014 prices resumed the uptrend from the level of 12950 and made a high at 15742 level on 16th May 2014. Since then Index has been moving in the consolidation and not yet taken out the high of 15742. In this whole consolidation prices have tried thrice to take out the level of 15742. More number of times a resistance is touched the more likely it is to be broken. However, price confirmation is important.

As shown in Daily chart, the current rally which started from the level of 10050 in the month of February 2014 increases the odd that triangle pattern which was ongoing since 2008 has completed near 10000 in form of intermediate wave [E] and ongoing up move is the new leg on upside.

The same can be seen on RSI. We have been using RSI to know any shift in the range rather than overbought/oversold level. In the start of 2012, RSI touched the level of 85 and after that medium term trend for Bank Nifty remained up which rallied from 9500 to 13500 levels. The same is the case with current rally, this time as well RSI has also touched the level of 85 and currently prices are consolidating at higher levels which indicates that index may be preparing for the next move on upside.

As shown in 60 mins chart, as per basic technical analysis after the sharp rise if prices consolidate within the range then it is a good sign. As per wave perspective minor wave (iii) completed at 15742 and ongoing move is in form of minor wave (iv). Currently, as prices have not taken out high of 16th May 2014, it is difficult to say whether wave (iv) is complete or not. Any move above 15750 level will suggest that minor wave (v) has started on upside.

In short, 15750 is the level which should be kept in mind for coming trading sessions. Any close above the same will take prices towards 16500 levels.

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