Bank Nifty is important sector and participation of this sector is very vital to know the overall strength or weakness in Indian Equity Markets.
Overall structure of the same is explained below.
Time cycle is a very important component that is probably missing in Elliott wave or Neo wave. This theory focuses more on prices. It is therefore important to understand the Time cycle concept because even if you right in the overall direction of the market but cannot time it well then trading can still result into negative returns. Below we have explained how Time cycles are combined along with Elliott wave.
Bank Nifty daily chart with 108 days Time cycle
Elliott wave: As shown in daily chart, this index has showed best of the up move from August 2013 till start of 2015 and post that prices have been correcting on downside. As per Elliott wave perspective, prices have completed 5 waves at the high of 20900 levels. Post that index has made lower highs lower lows formation which indicates that medium term downside correction is ongoing. Prices are intact within downward moving red channel and as long as sustains below the pivot resistance of 18850 level trend will remain negative. 60 days Exponential moving average has been providing the important information. During the up run of last 1.5 years prices found support however as of now same is broken decisively which indicates negativity.
Time cycle of 108 days: When we apply one of the Hurst Time cycles of 108 days we get a very good reversal areas as shown on the above chart. This time as well prices formed a low exactly at the cycle low near 12th June and this index bounced back from near 17200 to near 18500 levels.
Bank Nifty is a leading sector and formed a top even before Nifty. Now it will be crucial to see if the series of lower highs and lower lows is broken or prices again turn back down from the downward sloping channel resistance.
During such juncture it is important to understand the crucial turning areas along with the internal Elliott wave structure.
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