Thursday, July 19, 2018

Trading Gold: Using the concept of Channels, Horizontal lines and RSI!

Precious metals – Gold and Silver had been in an impulsive downtrend. During such times it is best to adopt a few basic but important methods to time the entry for short term trading.
Look at the below chart of MCX Gold where we have applied the concept of Channels, RSI and Horizontal line. A confluence of these simple methods can help one to derive good trade setup.
MCX Gold hourly chart:

The above shows a simple method where we can see amazing application of channels along with horizontal line concept and Relative strength index (RSI) indicator.
An ideal trade setup would be for the short positions as the overall trend over past few days is negative. It is wisely said to trade in the direction of the trend as the line of least resistance is on downside.
Now when prices break below the support horizontal line and reverses from the channel resistance as well that is the ideal trade setup. We can see reversal in RSI as well during such time. We also keep a track on price movement on COMEX Gold to have high conviction.
Price has again arrived near the channel resistance and is on the verge of reversal from there. It is about to break below the short term red channel support and RSI is also on the verge of reversal. So is it time to go short on GOLD?
Get access to Intraday / Positional advisory on commodity where we shoot the calls via sms or yahoo with complete follow-up. Always remember trading is never a certainty and will involve risk. So maintaining strict stoploss is must and if you are not able to do that one trade can eat up all your profits. Also when someone talks about 99% accuracy think again! You think it is really that easy when we are forecasting the future. I agree there are times when your accuracy is around 95% for certain period but that too will not last long. It is best to be conservative and maintaining it near the zone of 70% – 85% is what can result into overall profitable trades.
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Thursday, July 12, 2018

Nifty beyond 11000! What is next?

Nifty has managed to cross beyond psychological 11000 mark yet again! This has been exactly the way it was expected.
See yourself the below gist picked up from the monthly research report – “The Financial Waves Monthly update” published way back on 7th June 2018.
Neo wave pattern: If you look carefully Nifty has not done anything in 2018. The year started near 10550 levels and prices are still hovering near the trading zone of 10550 – 10800 levels. This shows there is an ongoing distribution for many months. Predicting the sideways pattern is most challenging as there are a few equally probable scenarios. Only when the pattern is near completion we get high conviction trade setup. It is therefore prudent to keep evaluating the ongoing pattern under formation. For now we are assuming Diametric pattern is continuing since there was expansion in earlier legs and contraction so far. Also wave f size has been similar to that of wave b shown in Figure 3. Ongoing wave g on upside can take prices towards 10900 levels. It will be a tough call to make whether new highs will be touched or not but we can expect more of a double top type of scenario where wave g will terminate near 11000 – 11100 zone ideally. We will keep a close watch on momentum as and when prices approach that range and mention it in our short term updates.
Nifty daily chart – (anticipated in monthly update on 7th June 2018)

Nifty daily chart – (Happened)

Nifty daily chart – Gann Projection levels (showed on 7th June 2018)

Anticipated – It will be a tough call to make whether new highs will be touched or not but we can expect more of a double top type of scenario where wave g will terminate near 11000 – 11100 zone ideally. We will keep a close watch on momentum as and when prices approach that range and mention it in our short term updates.

Happened: The above charts are self-explanatory that shows how markets have moved. We have been expecting such trend and anticipated it more than a month back. The only change is in momentum. The move on upside is euphoric maybe to suck in the maximum retail participants. I am not trying to catch a top unless the support levels are broken but this is the time to be alert again!
I turned bullish when majority were expecting break below 10500 levels again based on Time cycles and other Neo wave methods.
Gann projections – If you look at the 3rd chart carefully you can see the Gann projection given as 11078 and the high touched by Nifty is 11078.30 to be precise. So will this Gann projection work again?
So what is next from here? Is this up move going to continue towards life time highs or are we going to see the distribution again!
Imagine the power of trading if you know which tools to use and you can also time it well, For years I have worked on various patterns, methods and cycles and finally drilled down to these methods that has helped me to forecast the turns so accurately – Elliott – Neo wave, Hurst’s Time cycles and Gann projection levels! Learn these methods yourself in the upcoming two days training seminar on 21st and 22nd July in Mumbai, Hotel Radisson. Only a few seats left, ACT NOW – Know more
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Wednesday, July 11, 2018

Tata Elxsi – 18% returns in just 22 trading sessions!

You might have seen me talking about the theme of the year is IT sector. It has played out exceptionally well and you can clearly see how strongly IT stocks are performing including largecap stocks like TCS.
Now below is the stock recommendation which was given in our Multibagger research report on 11th of June when the stock was near the zone of 1225 levels. Today it touched an intraday high of 1452 levels. That is a whopping 18% gain in just a month’s time!!! Also this is during the corrective phase of the market.
See yourself below chart of Tata Elxsi which helped us to be bullish at such lower levels:
Tata Elxsi weekly chart:

The above research about L&T Infotech was published on 11th June 2018 in our “The Financial Waves Multibagger update”.
Tata Elxsi price on 11th June 2018: 1225
Time Horizon – 1- 2 years
Investment – 5% of capital
Target price – ……..
Stoploss – 700
Tata Elxsi is in the Computers-Software sector. The current market capitalization stands at Rs. 7,691.14 Crore. The company’s P/E ratio is at 37.70.
Elliott wave perspective: As shown in Weekly chart of Tata Elxsi wave (iv) of [5] is probably complete and prices are moving higher in the form of wave (v). Any dips can be used as buying opportunity in this stock for the target of ……….
One can start buying this stock at current levels and add on dips towards …….. and can maintain stop around 700 price levels which is near the starting point of wave (v).
Conservative target for this stock can be maintained at ………. on the upside
Happened: As mentioned prices exhibited a sharp move on upside and has performed as expected making a high of 1452. It is interesting to see that Tata Elxsi has provided nearly 18% return in just 22 trading days. So what is the target level?
We also published today another stock that has potential to provide multifold returns. Do not miss out on the next big trending opportunity. Also keep in mind there is always a risk involved and the investments should be done by maintaining strict stoploss. This is a systematic approach to create wealth.
The above research clearly shows how one can capitalize the study of Elliott wave and ride the ongoing trend. If you wish to build portfolio we can help you with indentifying the stocks which can give alpha returns over medium to long term holding period. Subscribe here now
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Tuesday, July 10, 2018

Asian Paints – How Fractal nature predicted the strong up move?

We believe in the theory that freely traded markets are patterned and exhibits fractal nature.
This makes them behave in a predictable manner. By pattern we mean that there are certain structures that repeat itself from time to time and can be seen on charts that shows prices of any tradable instrument. The “Fractal Nature” is again an important concept which states that these repeatable patterns occur on varied time scales and can be seen on 1 minute charts to Daily charts to Monthly charts. Fractal structure is seen in nature across from DNA to snowflakes to galaxies and so it is also seen in stock markets which reflect collective emotions and social mood of humans.
Asian Paints weekly chart: (anticipated on 14th May 2018)

Asian Paints weekly chart: Happened

Following was mentioned on 14th May 2018 for Asian paints in the daily research report –
On weekly chart of Asian Paints, you can see that the entire rise had been strongly impulsive. The month long consolidation looks to be finally over in the form of wave (4) and we are now moving in the form of wave (5) on upside. This stock has given a multi-month breakout and can be headed atleast towards 1400 levels or higher.
Fractal Nature: There is a classic pattern repetition which shows Fractal nature at its best. We can clearly see a similar pattern in lower degree wave 4 and not the primary degree wave (4) also showed very similar pattern and a positive breakout. You can see the power of Fractals here. We can expect a similar outcome which is a strong rise in the form of wave (5)… BANG ON!
Happened: Asian paints showed strong rise and the stock surpassed the previous high as well. Stock is trading at life time high levels irrespective of the price of Crude which is a major input raw material for paint industry.
The above clearly shows power of Fractal nature and if you can identify a pattern in the past the same can be used to forecast in future for trading or investment perspective.
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Monday, July 9, 2018

Escorts: Will this stock form an important low?

Escorts had been a laggard for many months but this stock has again arrived near important juncture. So, what is the technical picture suggesting? The below research gives the bigger term trend for the stock.
The below research is picked up from “The Financial waves short term update”
Escorts Daily Chart:

Elliott Wave analysis: Following is picked up from morning Equity research report

In the previous session Nifty Auto closed on a positive note and the same was reflected on Escorts as it closed 1.44% positive.
As shown on the daily chart, the prices are quoting at the channel support & in the previous instances the prices have bounced back from the support hence we are expecting the same to occur in the upcoming sessions. We can see that the Ending Diagonal pattern is under formation and currently wave a of (v) is ongoing.
As shown on hourly chart, (shown in daily research report)
In short, Escorts is at crucial juncture. A break on the upside beyond ….. levels is expected to take the prices higher towards …… levels …….
On the above chart can you see brilliant application of channels, Elliott wave counts, Time cycles and much more. Get the detailed analysis on stocks along with Nifty, Bank Nifty in the daily equity research report – The Financial wave short term update. Subscribe here
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Monday, July 2, 2018

Is correlation between Nifty and Crude Oil a MYTH?

Crude is one of the highly traded energy commodities and keeping close watch on the same is very important. On media or business news channels we have seen many times that experts speak about the impact of Crude prices on Indian Equity Markets.
You may have heard that rising crude prices are bad for economy and thus it will have negative impact on stock market or falling crude prices are good for economy. These are the two important phrases which we have seen on media many times. However to be objective in the market, it is very important to look at the trend of each of these asset classes and also to understand if stock market is really moving on back of volatility of Crude or not!
Following is the research by Ashish Kyal, CMT published in Journal of Economics by National Institute of Banking Management (NIBM – Pune) and circulated across the banking industry.
Nifty and Crude Oil- Understanding the relation

We have placed both these asset classes in the same chart to understand the overall correlation. Here we can see that in the year of 2008 it was the Indian Equity Market which formed a top earlier and then after few months Crude followed the trend of Indian Equities and started to move lower. Post the same in the start of 2009 both these assets formed a low more or less in the same month. From the above chart it can be seen that high direct correlation existed from 2008 till 2010 between Nifty and Crude prices.
In the period from last quarter of 2010 to first quarter of 2011 there was an inverse relation during which Nifty showed sharp fall but Crude continued to move higher. 
From 2011 to the mid of 2013 Crude and Nifty both moved in tandem. This was the period where predictability would have become easier depending upon the trend of other asset class. However this relation fade away and then we witnessed inverse relation from mid of 2013 to the mid of 2015. This was the period when people came out with the frame that falling crude prices are good for Indian Equities. However after mid of 2015 Crude and Nifty both started to move lower.
The period from mid of 2015 to start of 2017 was period again with high correlation and it showed direct relation. Interesting thing to observe was that both these asset classes moved higher together. Isn’t it surprising to see this?
Case in point: From the above observation it can be said there are different periods in which Crude and Nifty had direct and inverse relation.  Here we can also see that period of direct relation was longer than that of inverse relation.
The above chart clearly shows that it is “Myth” that rising Crude prices have negative impact on Indian Equity Market. The fact is that both these asset classes have continued to follow their respective trends in which they existed.
Food for thought: If low Crude Oil prices are good for Oil Marketing companies like BPCL, HPCL, IOC which has showed exponential rise and has provided support to the Nifty in last few years. On the other side there may be a case that high crude prices can increase the profitability of companies like Oil India, ONGC, Reliance Industries which has one of the highest weightage on Nifty and Sensex and thus greater support can be expected from Reliance in coming years.
In short, judging the performance of Indian Stock Market based on Crude prices is not a good idea since there is no consistency in the correlation and thus one should follow objective technical tools to understand the overall trend.
Learn the application of above techniques on different markets – Equity, Commodity and Currency in the upcoming training on 21st and 22nd July in Mumbai and develop trading strategy. Know more here