Wednesday, May 10, 2017

Nifty breakout above 9370 but why RSI, Advance decline line is very concerning?

Nifty has continued to move in the unchartered territory with a positive breakout seen in today’s trading session. This will keep the short term trend positive.

With markets moving in unchartered territory is it time to stay complacent or cautious? Look at the below research published today morning in our daily equity report “The Financial Waves short term update”

Nifty daily chart:

Chart courtesy: icharts

Plot using charting tool on our website click on the symbols - Nifty, Midcap, Smallcap

Following is part of the research published today morning in our equity research report -
In previous update we mentioned that,Nifty is intact in narrow range. Wait for decisive breakout. Move above 9370 will result in to continuation of positive trend in form of wave g whereas break below 9270 will be negative sign

Nifty has continued to do what it has been doing during the entire trend which started from 7900 levels i.e. exhibiting trending move for 3 to 4 days and then moving in a range for twice to thrice that time. It has been almost 8 days since Nifty has been moving in a narrow range of 9270 and 9370 levels. Stock specific movement has continued during this phase but as mentioned earlier not all stocks are participating.

Advance decline ratio helps us to gauge the overall momentum when the broader market index like Midcap and Smallcap are hitting new life time highs. We can clearly see from the chart shown above that Advance decline line has not improved at all and it has continued to deteriorate with the rally. This is not a healthy sign from medium term perspective and it indicates that only a few stocks are leading the rally in high beta indices. Nevertheless, there is no negative price confirmation as yet and so the trend will remain cautiously positive.

 As shown on daily chart, prices are exhibiting series of negative divergence with respect to indicator RSI. There is nearly 3 negative divergence i.e. prices made new high but momentum indicator made lower highs. It is not very often to see such series of negative divergences that to on a daily scale. As per Advanced concepts of Elliott wave Neo wave, faster retracement of the last wave provides confirmation that the recent trend is over and the move on opposite side has started. So faster retracement below ……… followed by complete retracement of wave …….. will confirm move on opposite side has started but unless that happens one should play the range i.e. buying near supports and ………… Breakout above 9370 will extend this rally further towards the Gann projection levels of ……………. shown in current monthly research report.

As shown on hourly chart, (shown in actual research report)  There is a possibility that wave g is forming a ……….. pattern and currently wave b is in formation in the form of Diametric structure. This wave b has already consumed 8 days. So for this to be a valid pattern we need to see positive breakout soon above 9370 levels.

In short, ………

Nifty has been moving precisely as expected and the path given in the monthly research report. The pattern has been playing out well but we are now going to take a cautious stand given the series of negative divergences and deteriorating breadth. There is no negative price confirmation yet and prices are headed towards our mentioned target levels exactly as expected. The Financial Waves short term update will provide detailed outlook on Nifty and what is the trend after it reaches the target levels. Subscribe NOW using the Summer offer and see yourself the urgency of knowing the important supports at this time. The accuracy has been very high as the pattern is playing out precisely!

No comments:

Post a Comment