Time is one of the most difficult elements to predict for any freely traded markets. Nevertheless, it is the most important aspect for a trader involved in Derivatives – Futures & Options.
The world looks very different in just a week’s time. Majority were worrying about rate hike in USA and now after just a week everyone has been talking about the probable delay. This has happened after US markets also moved sharply lower. Case in point is government actions are lagging indicators whereas equity markets are looking at the future and trying to discount what can happen over next few weeks or months.
Now coming back to Indian equities – the fall on Nifty from 8520 to the low of 7667 happened in mere 4 days of time. So if you would have been out during that period or exited the short positions only 2 days later it would have created strong financial and emotional impact as prices now rallied back from 7667 to near 8060 today. Aim of a trader should be to capture the most of the trend and also remember you can never capture exact low or exact top. However, if you are aware that the Time cycles are suggesting reversal is imminent when everyone is euphoric or panicking it will make a hell lot of difference!
Nifty daily chart as on 28th August 2015 – 11:00 am
The above chart shows a Time cycle that has helped to capture not only the reversal but to alert when is the right time to exit from the existing short positions in order to make the most from the trend. Simply observe the arrows marked which are all equidistant and following a set of rule irrespective of the Global or domestic events!
Below are the excerpt picked up from the daily equity research – “The Financial Waves short term update”
Nifty was at 8370: On 21st August morning Equity research report following was mentioned “Nifty has been moving exactly as expected and decisively broke the first support at 8425. Now move below 8338 will result into faster retracement of last rising segment thereby providing 2nd stage negative confirmation that medium term downtrend has resumed. Avoid catching a low as the trend can be sharp and volatility can be high!”
Nifty was at 8280: On 24th August morning Equity research report following was mentioned “In short, the trend for Nifty is firmly negative and surprises should be on downside. Follow trailing stops and ride it as long as it lasts. As mentioned earlier volatility can be high and avoid getting carried away during intraday swings. The majority of action can be over next 6 to 7 days!”
Nifty was at 7792: On 27th August morning Equity research report following was mentioned “In short, as long as 7930 is intact on upside, Nifty can trade in range of 7930 and 7667 level. Looking at the Time cycle of 54 days and channel support, we continue to think that positive attempt is plausible in coming trading sessions but only above 7930 level.”
Happened: Nifty is now trading near 8060 levels from 7792 mentioned in earlier morning update!
The majority of action is indeed over within just a week as mentioned on 24th August itself. This is indeed a thrilling experience even for us when we see Indian markets behaving as per predefined set of rules even when it is driven by emotions! Subscribe now to “The Financial Waves short term update” along with Monthly forecasts to get a clear direction of Indian and Global markets and understand theTIME Element which is key to a trading success!