Wednesday, March 22, 2017

Where Nifty is headed? Application of Andrews Pitchfork Channel, Elliott wave, momentum, bar technique!

Understanding the trend of Nifty with the application of basic as well as advanced technical likes Elliott wave, Andrews Pitchfork Channel.

Why we were alert when Nifty arrived in the zone of 9150-9200?: Post the UP Elections results Nifty had sharp Gap up opening and took out the psychological mark of 9000 in the session of 14th March 2017. After the same buying spree continue in Nifty towards 9150-9200 level. This was the time when majority were extreme bullish and you may have seen many buy calls on Nifty on news media. At the same time our in-depth research technical tools were suggesting us not to be complacent but alert.

In our flagship product “The Financial Waves Short term Update” dated 17th March 2017 we showed Andrews Pitchfork channeling technique on Nifty to our client. At this time prices were exactly lying on the channel resistance from where risk reward on upside was not favorable. (HDFC Bank: Concept of RSI smoothened by Moving average!) Imagine what would have happened next? Prices formed spike above the channel and entered again into it which provided the first weak sign. Since then Nifty has continued to move lower. Such techniques can help us to avoid financial as well as mental loss.

Nifty 60 mins chart:


Nifty 60 mins chart: (Happened till now)

Wave analysis:

Part of research taken from 17th March 2017: On hourly scale we are showing Andrew’s Pitchfork channel. The center line is the median trendline with two equidistant parallel line. This is more systematic way of drawing a channel as it takes into consideration the median prices. Coincidently, this channel is also in sync with our previously drawn parallel trendlines. Yesterday’s close is exactly on this line and so if price action from here on is going to be crucial.

Part of research taken from 20th March 2017: Prices violated the channel resistance in the first hour however post the same it has again entered in to channel. Such action happens when the rally is in matured stages.

The above research clearly indicates our cautious tone based on Andrew’s Pitchfork channel as well as momentum indicators. Post the publishing of this, Nifty has moved lower from 9219 to 9040 level till now. So what should be the trading strategy now?

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