Tuesday, December 13, 2016

Nifty: How Bollinger Bands(R) can be combined with Time to know trend!

Understanding the trend of Nifty applying Bollinger Bands combined with Time.

The month of November 2016 was trending for Indian Equity Markets in which Nifty moved lower from 8600 to the low of 7915. However as against to that in current month there is choppy trend. During the choppy environment, short term trading becomes difficult and one should book profits as and when occur to minimize the risk. Bollinger Bands are one of the important tools to apply during the range bound market. However along with this, we also combine Elliott wave along with Time concept to know the probable timing when the next trend can start. Such techniques can help in riding the next waves. Below we have shown part of research taken from The Financial Waves Short Term Updatepublished in todays morning.

Nifty 60 mins chart:

(Part of research taken from today’s morning report)

Wave analysis:

Nifty had a Gap down opening near 8230 in previous session and prices traded in red territory for the rest of the day. The pressure was across with most of the sub-indices closing negative. Advance decline ratio also deteriorated. However, just one day of selling pressure that too when we are aware that the upmove is corrective in nature such type of counter trend moves cannot be ruled out.

Looking at the overall structure it seems that wave c is subdividing and is forming an Ending diagonal pattern.  Yesterday’s down move was only wave … and we should now see wave ….on upside. Please note this wave … is not going to be very strong as in Ending diagonal pattern the momentum keeps decreasing in each rising segment. Also the upside move is limited towards 8350 – 8400 levels and so this leg is going to consume more of time rather than price.

(Daily chart has been removed purposely which is shown in original report)

From Time perspective wave intermediate wave C shown on daily chart, took approximately 60 days and so wave E which is currently ongoing should take more than 20 days to match the 1/3rd degree. So far from the lows of 7915 it is only 15 days and therefore it is unlikely that wave E will be over is short stint without achieving either price or time targets. This increases the odd that minor wave c of E is subdividing as mentioned above.

As shown on hourly chart, yesterday’s low was near 8154 which was close to the support zone of 8150. Let us see if the same level remains protected in today’s session preferably on closing basis. This is also near the lower end of the Bollinger bands along with the 0-b support trendline and Gap area. So the zone of 8130 – 8150 has cluster of supports and for downside to open we need to see strong breakdown from here on. During a weak trending environment Bollinger Bands tend to provide good support to prices.

In short, we can expect some consolidation between 8130 – 8230 levels for now. Decisive break above …..will confirm our preferred pattern that wave …….

To know the in-depth of wave structure of Nifty, Subscribe to “The Financial Waves Short Term Update”which covers Nifty and 3 stocks where short term trading opportunity exists or “The Financial Waves Trading Update”which includes Intraday trading strategy on Nifty. For more information visit Pricing Page

No comments:

Post a Comment