When Nifty is moving in a range and consolidating with no clear direction it is better to look at a few other techniques on a larger degree to be sure if we do not miss out the bigger picture.
We have been telling about the reversal in trend of Indian equity markets since start of March when index reversed from 9119 levels and have been very accurate to highlight it here so that the readers stay objective when it was most needed. Since then Nifty has already corrected by nearly 12% from the highs. However, it is prudent to test our outlook by applying a few proven methods of technical analysis that worked brilliantly in the past – Daryl Guppy when combined with Elliott wave analysis gives a very objective outlook.
The below research was applied in today’s morning research report “The Financial Waves short term update” along with medium term Neo wave counts. There cannot be more objective way of looking at charts. Completely different studies providing similar outcome increases the probability and conviction.
Daryl Guppy method of Moving averages applied on Nifty
Daryl Guppy method of Moving averages is an excellent way to gauge if the medium term trend is changing or if it is still intact. This method uses a cluster of short term moving averages and cluster of long term moving averages.
Whenever all the short term moving averages move below each and every long term moving it indicates that the medium term trend has probably changed and whenever each and every short term moving average moves above all long term moving averages, longs can be initiated as it indicates reversal in trend.
Looking at the Nifty chart above requires little explanation and we can clearly see that how all short term moving averages moved below the long term moving averages recently. Blue averages are now retesting the red averages and turn back down from here will decisively change the outlook to negative.
Also please note that how long term moving averages cluster together after which major trend reversals happen.
In a nutshell, these are the objective techniques that are suggesting the reversal from positive to negative and helping us stay rational rather than getting carried away. Over short term ……… will act as immediate resistance and the support lies near ………. zone which is as per Bollinger bands concept highlighted in previous update.
To know the Neo wave counts of Nifty and how we are combining both of these techniques subscribe to“The Financial Waves short term update” which covers detailed analysis on Nifty and 3 different stocks. Subscribe annually and get the weekly medium term research report absolutely FREE which will cover Nifty Neo wave analysis along with MCX Gold medium term outlook. Contact US at email@example.com or call us at +91 22 28831358 / +91 9920422202 for more information…