Friday, September 22, 2017

Wednesday, September 20, 2017

What is next for Nifty? Elliott wave pattern and trend following system

Bottom Line: Nifty took out resistance zone of 10138-10155 which has open up further upside possibilities. Trend is positive.

Nifty daily chart:

Nifty 60 mins chart:

Wave analysis:

In the previous update we mentioned that, “Nifty trend will remain on upside with 10040 as crucial support.Expect some consolidation and then 10252 is the next level to watch out for!”

Nifty opened near 10175 but quickly moved towards 10130 and then traded in a narrow range throughout the day. Majority of the stocks traded in sideways action after a positive opening. During such times intraday trading can be little challenging as the stocks do not exhibit necessary momentum after the opening hour.

On Nifty daily chart, we are showing a simple trend following method which is based on two short term Moving averages. If you look at the 5 days (blue) and 20 days EMA (red) prices have been managing to sustain above both the averages. Also throughout the trend which started from 2017 it was only in August that 5 days EMA moved below 20 days EMA but that resulted into sideways action instead of downtrend. Now the 5 days EMA is again sustaining above the 20 days and as long as this is intact the strategy will continue to be of buy on dips.

From wave perspective as of now wave c of the Diametric pattern is ongoing and post its completion we should see wave d which will be retracing a part of wave c.

As shown on hourly chart, prices are moving in upward sloping blue channel and are currently near the upper end of the channel. Therefore we can expect some consolidation to take place with 10040 as the short term channel support. Stock specific action will continue during this period.

In short, any dips should be utilized as buying opportunity as long as the blue channel support is intact. Prices can eventually head towards the Gann projection level of 10250 on upside as explained in previous update. Decisive break below 10040 will indicate that wave c is over and wave d has started. 

Subscribe NOW “The Financial Waves trading update” you will also get detailed chart of Nifty along with Trading strategy that explains the current state of markets from short to medium term perspective. 

Monday, September 11, 2017

Indian Equity market is waiting for fresh trigger for clear direction!

Following is the English transcript of the article published in Economic Times section of Navbharat Times by Ashish Kyal, CMT published today morning before markets opened.

Indian Equity markets have been consolidating over past few weeks after forming a high in month of August 2017. Sensex closed near 31687 levels on Friday of previous week. August month showed increase in volatility with the high made at 32686 and low near 31128 levels. As compared to that, September showed narrow range bound movement so far and there is possibility that volatility can again increase in coming weeks.

Simple method to look at the trend: To understand the trend one very simple or basic method that investors can follow is to look at the highs and lows of previous month. August month low is at 31128 and so for positive trend to continue protecting this support level is very important. If prices break below this support then profit booking can be expected that can result into stocks moving lower. One should avoid buying stocks showing very high Price to Earnings (P/E) multiples as they might have deviated from the fundamental fair valuations.

Impact of GST: GST rollout and compliance has been ongoing smoothly but it seems that the economic activity lost some pace that slipped to three year lows of 5.7%. This is also because of the slowdown in manufacturing activity probably due to GST implementation. It will be important to see if the earnings can start picking up in coming quarters or not.

Banking index: Bank Nifty that measures the performance of both PSU and private sector banks has also shown some selloff in month of August after forming a high above 25000 level on 2nd August 2017. Majority of banking stocks have failed to show any meaningful bounce back in September. Bank Nifty has a very important support near 23850 levels. It is important to see if this support level can be protected or not over coming week. 

Currency outlook: Indian Rupee has shown depreciation against JPY, GBP and EURO currency pair. It seems that Indian Rupee is getting weak over past few weeks and it is therefore important to see if weakness can spread to INR movement against USD as well. USDINR has an important level of 63.60 as support and 64.30 as resistance. Break above 64.30 will indicate that volatility in currency is going to increase and it will not be a very good signal. So currency has also arrived at crucial juncture along with equity markets.

Week ahead – Sensex has been moving in a narrow range of 32000 on upside and 31350 on downside. We can expect a trending move to emerge in coming week. Breakout above 32000 will be positive whereas if the important support of 31350 is broken then we can start seeing selling pressure. Investors should therefore use proper stoploss level in case there is sudden reversal for existing positions.

Tuesday, September 5, 2017

How to trade Nifty on intraday using basic Technical analysis & Bollinger Bands®?

Nifty formed a low near 9686 on 11th August 2017 and post that prices have been moving in overlapping fashion with no clear trend.

It is normal to see an overlapping move after a strong trend. The fall from 10130 to 9685 on Nifty was sharp and fast and for the first time in 2017, prices have failed to show strong momentum from channel supports.

Below is the hourly chart of Nifty shown with application of Bollinger Bands. The best strategy during such scenario is to buy near supports and sell near resistance.

Nifty 60 minutes chart showing Bollinger Bands:

Even during this non- trending move it is possible to trade the markets on intraday basis. Below gives a few of the past trading strategies given on Nifty before the market opens. These strategies are given on daily basis in “The Financial Waves Trading update”

Trading Strategy given on 4th September - Short positions can be created on move below 9900 with day's high as stop and target of 9860. BANG ON!

Happened: Nifty moved precisely as expected on 4th September and made a low near the level of 9861 after breaking below 9900 levels.

Trading Strategy given on 1st September - Long positions can be created on move above 9940 levels with 9900 as stop and target of 9980. BANG ON!

Happened: Nifty moved precisely as expected & touched the target level of 9980.

Trading Strategy given on 30th August- long positions can be created on move above 9850 with 9800 as stop and target of 9900. BANG ON!

Happened: Nifty made a low near 9850 and then moved towards the target of 9900 levels.
The above trading strategy has worked out extremely well irrespective of the non-trending move. This clearly shows the power of the techniques that we are applying and how it can be capitalized using the Elliott wave theory.

Subscribe NOW “The Financial Waves trading update” you will also get detailed chart of Nifty along with Trading strategy that explains the current state of markets from short to medium term perspective.