Wednesday, February 15, 2017

Cashing the Crash – Bank of Baroda, Tata Motors using Elliott wave!

Tata Motors shown serious capitulation in less than 2 trading hours and so did Bank of Baroda. Even when Nifty has been in a range these stocks declined sharply providing brilliant trading opportunity.

You can read detailed analysis on Tata Motors cashing the crash!

As per Elliott wave there are many corrective patterns like Flat, Zigzag, Triangle, Double correction, Triple correction and Complex correction. Understanding the pattern is easy but it is more important to identify the same when pattern is under formation so that next trade can be taken with proper risk reward ratio.

What is Elliott wave Flat correction pattern? This pattern is divided in 3-3-5 which means first 2 legs which is a and b are corrective waves. In this, wave b should retrace more than 61.8% of wave a. Post the completion of wave b, we can expect wave c should start in opposite direction to that of wave b in form of 5 waves i.e impulsive in nature. Bank of Baroda 60 mins chart meets the exact criteria. The below research is taken from The Financial Waves Short Term Update which was published on 14th February 2017

Bank of Baroda 60 mins chart:

(Part of research taken from today’s report i.e 14th February 2016)

Wave analysis:

“There was strong selling among the PSU banks and despite of Nifty closing in the green territory these stocks were the major laggards in the last trading session. Bank of Baroda was the major loser and it was down by 10.56% exhibiting a free fall from the peak.

Post the lows of 110 levels at the early 2016 this stock is forming a complex correction within the blue upward slopping channel. Wave z of the same was forming a flat correction pattern which now looks to be complete at the recent highs of 190 levels and the next leg has started on downside. As per this scenario using bar technique would be advisable and stay bearish as far as the previous bars high is intact on closing basis.

As shown on 60 mins chart, yesterday there was a Gap down opening at the start of the day and then there was complete domination by the bears over this bank. The entire previous rise was taken out in faster time with a series of red candles. As per wave perspective the complex correction looks to be complete at the recent highs and now the downtrend has started so outlook will remain negative. ….

Elliott wave can help us to place ourselves in the right direction of market with proper risk management strategies. To know the in-depth research on Nifty and 3 stocks on daily basis subscribe to “The Financial Waves Short Term Update” Subscription options

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