Thursday, March 12, 2015

Nifty:Using Bollinger Bands® along with Elliott wave for breakout confirmation!

Bollinger Bands® play very vital role in determining a trend reversal. This technique when combined along with Elliott waves provide a strong powerful entry and exit strategy. At times in order to catch a reversal even before we get two stage confirmation as per Advanced Elliott wave is to use Bollinger Bands method. An hourly close below the lower channel will provide first negative confirmation.
Many traders or Elliotticians have problems in identifying the entry levels. The reason being they depend only on Elliott wave for their trade setups but it is extremely important to use other objective techniques like channel, Bollinger Bands to get confirmation on short term time frame.
Now read the below article that helped us with entry level.
Nifty 60 mins chart: (published on 9th morning in paid Equity research report)
Wave Analysis:
(Below was published on 9th March morning research report The Financial Waves short term update)
In previous update we mentioned that In short, the trend for Nifty has reversed over short term and the high at 9119 should remain protected atleast for few days if not weeksfaster move below 8885 followed by 8750 will be strongly bearish but if that remains protected then we can expect pullback on upside
Two stage confirmation technique as per Neo wave
Nifty had a range bound movement yesterday between 8957 and 8850 levels. Prices broke below 8885 in faster time thereby resulting into faster retracement of the last rising segment. This confirms that wave iii is complete and now wave iv is ongoing. For a strong negative confirmation that the entire up move from 8470 is complete we need a faster retracement below 8670 levels from where wave iii started. This will provide 2nd stage negative confirmation that an important top is in place. However, if one has to wait for 8670 level to initiate short positions than the indicators might enter into oversold state. So there is a tradeoff between getting a confirmation and entering a position. To overcome this drawback we have to look at short term important supports that can provide us with earlier confirmation. The same supports are now near 8850 and 8750 levels.
The support as per hourly Bollinger Bands is near 8850 from where prices bounced back on Friday. So if we see an hourly close below this level the support of Bollinger bands will be broken.
In short, the trend for Nifty will continue to be negative on break below Friday’s low at 8850 which is also weekly bar low.
Happened: Nifty broke below 8850 and touched the lows of 8677 in just 2 days times. This clearly shows that how we combine the important techniques like Bollinger Bands along with Advanced Elliott –Neo Wave together to get early entry trade setups.
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