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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