BREXIT has been a major event that the world markets are eyeing upon to understand the underlying trend for future from here on. We believe that events will result into short term move but the major trend of the market eventually resumes. Freely traded markets follow specific set of patterns and rules that makes them predictable. Also market discounts the future and majority try to focus on events that will result into the market movement. There is a flaw in which majority thinks but Equity markets are constantly looking into the future…
We believe irrespective of the BREXIT outcome the underlying tone of the market has been already shifting and the trend that started from 29th February 2016 is now approaching a major completion.
Below is a part of the research picked up from “The Financial Waves short term update” daily research report published before equity markets open. Various technical indicators are now again getting aligned together pointing towards an important top very near irrespective even if Britain stays back in EU.
Nifty 60 mins chart:
Below research is picked up from “The Financial Waves short term update” – daily research report covering Nifty, Bank Nifty, stocks on periodical basis and showing application of Elliott wave, Neo wave, Time cycles along with other indicators.
In previous update we mentioned that, “So stay alert in case Nifty fails to show positive move above 8265. Sideways market creates state of confusion with no clear directional move which we are currently seeing and it is prudent to wait for breakout!”
Nifty failed to move above 8265 even in yesterday’s session and reversed back from the crucial channel resistance. The entire formation looks like distribution and various indicators are getting aligned again.
Bank Nifty has been underperforming over past few days and even the outperforming stocks like Yes Bank, SBI has lost its momentum and exhibiting distribution behavior. Along with this as mentioned earlier even though Nifty managed to move higher, Bank Nifty has still failed to take out the highs of 15th June. Moreover yesterday’s breadth was near 978 advancing to 1591 declines on BSE even though index was down by mere 0.20%. The number of stocks hitting new 52 week’s high is also on decrease indicating that there is loss of momentum over past few days. The AD line is on the verge of breaking the lows when of 29th February 2016 when Nifty was at 6825. These are not very promising signs and above that the expectations of seeing Nifty back towards 9000 is on a rise post the BREXIT event.
Looking at the Global markets with recovery over past few days there is high possibility that Britain might not exit EU which can create a short term upward spike but that should be only a temporary affair.
Diametric pattern: detailed explanation of the ongoing pattern given in the research report.
In short, majority of the indicators are again getting aligned when the breadth in the underlying market is deteriorating and everyone is busy focusing on the outcome of BREXIT event to create long positions. TRIN indicator, AD line, Channels, Number of new highs, Elliott wave pattern, sectoral divergences are hinting towards shift in sentiments and market dynamics. Price confirmation is going to be important which will be below …….. Move above …….. will extend short term up move but that will be the final breath for the market before medium term reversal…….
It is not easy to have a stand opposite to the crowd but objective and scientific methods help us to take a stand which majority might be missing. We turned bullish when Nifty reversed from 6825 levels in early March 2016 and now is not the time to get carried away in the euphoria. We will turn strongly bearish once the key levels are broken but the indicators are already warning us to be ready before pulling the trigger!
You can now learn the above mentioned techniques by attending the two days training workshop on most advanced technical analysis training and how Hurst’s Time cycles can be used to forecasts Neo wave patterns. The training is scheduled on 23rd and 24th July 2016 in Mumbai. For more details and registration visit http://www.wavesstrategy.com/FreeArticles/AnnuDetails.aspx?Article=11462 or Contact US