Tuesday, March 14, 2017

Nifty sharp rise post UP Elections 2017 but prices at upper channel level!

UP election outcome looks like repetition of 2014. BJP's landslide victory in UP clearly suggests strong hold BJP now has over majority of the states which makes their position very strong for the central elections in 2019. Modi wave looks to be stronger than before and post Demonetization this showcases increasing faith people are showing in him. This definitely puts forward for stronger growth over years to come and uplifts the positive sentiments. This time as well the rally started well before the election outcome but what is going to be crucial is the Gap area that should remain unfilled. India is probably headed for exponential growth from long term perspective
In 2014, post the result announcement, Nifty had a huge Gap up opening but prices started to fill the Gap during the day. Later, Sensex entered into red territory even though temporarily on the same day. It will be important to see if such repetition of events results into similar outcome during the day. 

Exit polls released on Thursday was already hinting towards BJP victory in UP but that did not result into any major movement on Friday. It seems reliability on exit polls is on decline. This created a tricky situation on Friday for traders as it was absolutely unclear which way markets want to head.  

Now look at the below chart which shows important channel on an hourly scale.

Nifty 60 mins chart:

In the morning Equity research report we mentioned the following:

“As shown on daily chart, prices are moving below the lower trendline of the channel. Let us see if prices can now move back above this trendline resistance and close above it. The resistance is near 9100 - 9120 levels as of now. However it will increase with each passing day. 

Over short term we will continue to keep the existing wave counts intact with wave …….. of Diametric pattern currently ongoing. The equality of wave …….. with that of wave a comes to about 9090 levels for now but movement on back of event outcome can result into short term euphoric rise. During such times day's closing becomes extremely important.”

Now look at the above modified channel which highlights how precisely prices are contained within this channel. Today’s high post opening was exactly on the channel resistance at 9122.75 mentioned in the morning before markets opened.

This only shows power of one simple technique which is the most basic fundamental even to Elliott wave – Neo wave analysis. Analysts following advanced methods tend to ignore the lifeline and foundation of technical analysis which can result into disastrous outcome. So even if you do not use any other methods but follow one simple trend following method like Moving averages shown above on 60 minutes chart along with channels it gives very important trigger for entering or exiting the trades irrespective of the event!
Detailed analysis and trading strategy post the event will be published in tomorrow morning’s research report – The Financial Waves short term update

Attend the most advanced training on Elliott wave – Neo wave, Time cycles and combining it with basic technical analysis for high conviction trade setups in Mumbai scheduled on 18th and 19th March. Also get free access to research products and online access to basic Elliott waves before the training itself. Limited seats left… Enroll NOW!

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