Wishing you all a very Happy & Prosperous 2012!

Waves Capital: Nifty moved exactly as we have been anticipating, Snapshot of past 3 days!!!

Waves Capital: Below excerpts are picked up from past 3 Financial Edge short term updates and this itself proves how accurately we are measuring the pulse of Indian markets. Write to us on helpdesk@wavescapital.com if you would like to subscribe to this Daily research publication on Indian Equity market.

Published on 27th December 2011 before 8:30 am

Nifty 60 mins chart

Published on 27th December 2011 before 8:30 am, “..we now stand at crucial juncture and there are other plausible scenarios opening up since Nifty is failing to move above 4800 levels”

Happened: Nifty made a high of 4800.40 and turned immediately from there and made a low of 4724 after falling steeply from 4800 levels we had mentioned.

Published on 29th December 2011 before 8:30 am

Published on 29th December 2011 before 8:30 am, “…A break of channel increases our bias towards negative side. Below 4690 we might head towards 4630 levels.”

Happened: Nifty made a high at 4700 failed to sustain there and broke 4690 then making a low of 4639

Published on 30th December 2011 before 8:30 am

Published on 30th December 2011 before 8:30 am, “In short, during last trading day of the year 2011, it is advisable to have very less exposure on either side. Bias for the day is sideways and Nifty can move between 4620 – 4690 levels.”

Happened on 30th December 2011: Nifty made a high of 4690.45 and low of 4610, finally closing the year at 4618 (average close 4624)

Write to us on helpdesk@wavescapital.com for subscribing to The Financial Edge report and see it yourself well before market opens what Nifty and stocks are going to do for the day!

Crude uptrend driven by news event but will it last!!!

The below is an excerpt from Commodity Edge short term update by Waves Capital which is published on Daily basis. A few labelings are purposely deleted since it is a free section

Crude Daily

Crude Hourly

Crude rallied sharply yesterday after a senior Iranian official on Tuesday delivered a sharp threat in response to economic sanctions being readied by the United States, saying his country would retaliate against any crackdown by blocking all oil shipments through the Strait of Hormuz, a vital artery for transporting about one-fifth of the world’s oil supply. Crude immediately started going up and came very close to previous top of 5392 level.

We still continue to believe that we are in wave ? formation but the short term trend continues to be up. Wave ? in case of flats can exceed start of wave ? and can extend even further. The magnitude of the upward correction is always difficult to forecast and time wise this wave shall usually take more time to develop. This is what has happened here as well.

To read where crude is headed from here and if news is really driving crude prices higher write to us on helpdesk@wavescapital.com for subscribing to our Commodity Daily publication..

Hindalco BLUE PRINT!!!

The below chart was published in Financial Edge Short term update, a Daily publication of Indian market. A few of the labelings have been purposely removed. Write to us on helpdesk@wavescapital.com if you would like to subscribe.

Hindalco Daily Chart

On the daily chart we can see an amazing scenario developing in Hindalco prices based on the study of Time cycles & Fibonacci relationship. The stock has retraced 61.8% of the entire upmove from 37 -250 levels.

Prices have corrected 55% from the highs of 250 levels in 233 days both 55 and 233 are Fibonacci numbers. Also the drop in value terms has been 140 (Fibo 144) and average per day fall is 0.60 (Golden ratio – 0.618). All this simply signifies the importance of Fibonacci series in stock markets. This also indicates the low formed at 113 is an important low and odds increases that this low shall be respected atleast for few weeks.

In our view the entire upmove from 2009 lows has rallied in an A-B-C formation. On the larger time frame we have shown the 328 days cycle and 82 period cycle. Both cycle has formed the bottom in first week of November thereby indicating that an uptrend can last till February 2012.

To get the short term and medium term price targets with crucial risk management levels write to us on helpdesk@wavescapital.com

Nifty took a "V" turn...

Nifty Daily

Nifty 10 mins chart:

Nifty 10 mins chart shows that we have moved down in the form of a-b-c correction and not 5 waves impulse. As we know wave C should be 5 waves move and since current down leg from 5099 to low of 4540 cannot be counted as 5 down we think this was only wave b of higher degree wave b as shown on daily chart. We have now started wave c on upside of this b wave.

Also yesterday’s rally was steep enough and retraced the previous c leg faster thereby indicating that current uptrend can give us bigger pull back on upside than anyone is actually expecting. Also we can see a break above the downward sloping red channel as shown on the 10 mins chart. Also in this current down leg we did not see Nifty moving down by more than 120 points from previous day’s close but a rally of 150 points in single day yesterday make our positive bias over shorter term stronger.

Sentiments have been bearish across and even most commonly read newspapers have started giving downward projections for Indian markets. This for us is bullish when combined along with other technical indicators.

In short, the bias is now positive over near term as long as yesterday’s opening gap between 4600 – 4550 is unfilled. A move above 4800 will provide further positive confirmation that we have started a move up till 4950 – 5000 levels. However, a follow-up rally will provide more vital information if we are indeed in for bigger rally or the entire up move from 4540 was just corrective 3 wave structure.

Waves Capital / Waves Strategy Advisors: Elite market Forecasting and Research House in India

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Nifty turned exactly on the 8th day with a spike up, the way we were anticipating!

Nifty Daily chart:

Time Anticipated on 29th November:

Happened: Rally terminated on 8th day, just took 1 more day than we anticipated!

Nifty 10 mins

We mentioned before on 29th November that “a close observation of the above Daily chart reveals a very important fact that in all prior instances (since the fall started in November 2010), after every steep move down Nifty rallied fiercely up for 6 to 7 days and ended that rally with a spike. It then turned down on the 7th day taking back prices to where it started matching the momentum of uptrend. The magnitude of rally has ended between 38.2% - 50% on prior occasions. If the similar pattern and cycle has to continue we will rally for 4 more days (2 days of rally is complete) till 4940 levels and should turn down from there with a spike.”

The magnitude of correction this time exceeded beyond 50% but Time and characteristics of upside correction was exactly like what we expected. The uptrend lasted for 8 days, took 1 extra day to complete the upside correction than we anticipated but turned by making a high near 5100 – exactly 61.8% retracement of previous down move. Nifty turned immediately from there on 8th day itself with a spike i.e. on Wednesday and we can see a steep selloff that happened yesterday.

Also in our previous days’ report - The Financial Edge published by Waves Capital we mentioned that “In short, we will now wait and watch if Nifty closes below 5000 for further downside move or manages to move above 5100 before going down”. We have been very accurate in catching this turn as well. As soon as 5000 was broken the selloff went to as low as 4925.

As shown on 10 mins chart, we have started a down move within the red channel which can make a new low at 4640 but it is too soon to commit that. We would see for a follow-up selloff today and a close of gap at 4850. As long as 5050 is intact we now see the current downtrend as either wave (b) of b or next leg down in form of wave c. Either of the scenarios indicates short term downtrend for now in Indian Equities.

USDINR moved exactly as anticipated six months back!

Anticipated on 16th May 2011: This chart was published in our Currency short term update during times of extreme optimism towards Rupee outperformance to USD but we were expecting a move up towards 52.

USDINR Anticipated on 16th May 2011:

Happened:

We mentioned before on 16th May 2011, “The weekly chart of USDINR shown above is picked up from our currency report publication where our currency analysts predicts movement of Indian Rupee against various currencies like USD, GBP, JPY & Euro. Looking at those charts and USDINR above it is mentioned that there can be some serious depreciation in Indian Rupee against USD. We can clearly see the Elliott wave markings on the chart and prices have formed Triple bottom at exactly 61.8% retracement of rally from 39 to 52 levels. The downward move is also overlapping and we can see a strong positive RSI divergence on weekly scale.

All this indicates USDINR should now start moving up and break the downward trendline. A break above 45.10 will provide strong confirmation that we might have ended multi-month down move on USDINR.

This also sends across bearish picture for Indian equities. We do concur that currency and equities do not move in lock step but the correlation does increases at major turning points.”

Currently USDINR has completed 5 waves up from the bottom at 44 to 52 levels and shall now correct the entire up move. However we might have completed just wave i of 5 and are in wave ii of 5. Either ways the short term trend points downwards. Subscribe to Forex alternate day report by Waves Capital to see where current wave is headed or write to us on helpdesk@wavescapital.com

Nifty is forming a big Head & Shoulder pattern!

Nifty Daily chart

Nifty 10 mnis chart:

 Nifty daily chart above shows a Big Distribution Head and Shoulder pattern that replicates text book example of Edwards & Magee book. Head & Shoulder topping pattern is a bearish pattern and occurs at major tops. A confirmation of completion of pattern is obtained only by break of the neckline and unless that happens, acting on this pattern formation is not a good idea. We are closely observing Nifty movements and a break occurs below the recent low of 4640. Any close below that level will be extremely bearish for Indian equity markets and gradual fall will change to a steep falling market. However, unless we see a close below 4640 we shall continue to move in the red channel as shown on the daily chart.

To support our pattern analysis we are using On Balance Volume (OBV) indicator. This indicator is created by adding the volume to previous cumulative value if the close is above the previous day’s close. The value of volume is subtracted from this cumulative value if the close is below the previous day. This indicator is therefore showing that volumes have been more on the downside than on the upside and the value is at the levels of March 2009. This is very crucial observation as it indicates lot of volumes has been moving on the downside and less volumes on the upmove. This perfectly supports the right shoulder formation of Head & Shoulder pattern which suggests downside volume increases on left shoulder and upside volume decreases. Also OBV is a leading indicator and it leads the prices at important junctures. OBV has given break below the long term support line and so Nifty should do so very soon!

Over short term, as seen on 10 mins chart we are forming a short triangle that should give a breakout upside and index can move towards 5100. However we might be late in the uptrend and so we remain cautiously positive till 5100 levels. A move below 4850 will strongly indicate that the uptrend is complete and the next leg down has started.

In short, the bias is positive over short term but given the cluster of resistances at 5100 levels we would remain very cautious.

Interim Update

Bottom Line: Please do not get carried away with opening GAP. The Big GAP looks more towards emotional trading rather than actual buying. We still believe this is an upward correction and not new trend up as it has taken more time to retrace previous down leg so far. Strong resistance now lies at 5050 and the probability of this getting breached is low. If Nifty is still following its 6 to 7 days up cycle then we should get a spike up tomorrow or on Monday and turn down the same day

Will Nifty follow the 6 to 7 days rally pattern?

Nifty Daily chart

Nifty had a big Gap up opening yesterday following the oversold state. We have been expecting positive move up since past 3 days when the break of 4720 turned the last set of bulls into bears. But we had our indicators and wave analysis in place that helped us to predict the turn up again which would have come as a surprise to many!

Nifty daily chart shows a big blue candle out of the downward channel. The trend over short term has changed towards up.

However a close observation of the above Daily chart reveals a very important fact that in all prior instances (since the fall started in November 2010), after every steep move down Nifty rallied fiercely up for 6 to 7 days and ended that rally with a spike. It then turned down on the 7^th day taking back prices to where it started matching the momentum of uptrend. The magnitude of rally has ended between 38.2% - 50% on prior occasions. If the similar pattern and cycle has to continue we will rally for 4 more days (2 days of rally is complete) till 4940 levels and should turn down from there with a spike.

Time will tell if this short term cycle is still intact! In short, the trend remains positive for this week and strong resistance comes into play around 4920 – 4940 levels.

Nifty has started the upward correction of the entire move down from 5300 to 4640

Nifty 10 mins:

Nifty Daily chart:

Nifty on Friday failed to move up thereby living upto the Friday’s negative expectations! On 10 mins chart, we can see that the short term trend channel is broken and prices have started the upward correction of the entire down move from 5300 to 4640.

The previous 4th wave as shown comes near 4910. We should correct atleast for a week in an overlapping structure. As long as prices remain above 4640 we stay bullish. The up going trend is already exhibiting an overlapping structure as a correction opposite to the higher degree trend should behave. This also confirms the intermediate trend has turned down and we are just correcting extremely oversold condition over short term.

As we mentioned previously, a move above 4780 would help Nifty inch higher towards at least 4900 or even higher towards 5000 now. While a fall below 4638 would negate our expectation of a short term pullback.

Nifty short term trend in later stages of down move!

Nifty 10 mins chart

Nifty Daily chart

Excerpt from Waves Capital Short term Update: We mentioned in our previous report, “We would refrain ourselves from forecasting the levels where the current down move should end but would rather adopt an anticipatory method to see if upward correction has started. As long as Nifty trades within the down channel and do not move above 4860 – 4880 the trend remains down. A move above these levels will indicate the short term upward correction has started.”

We have been very accurate in marking these levels as crucial and we can see that from yesterday’s trading range. Nifty made a high of 4854 and reversed back in into the channel. Short term direction for Nifty is now unclear and we would wait for a move above 4860 – 4880 for positive short term move up. A move below the low of 4765 will indicate the downtrend is still on going.

The Wave pattern as seen on 10 minutes chart, it is not clear if Nifty has completed the final 5th leg down or it is still on going. However we can see strong positive divergences across the stocks in Banking, Metals, Real Estate, Auto sectors on smaller time frames. This is typically how 5th waves are created with losing momentum and this is what we were expecting to see. Daily RSI is at 30 levels which has acted as support for previous lows. However we would still wait for price confirmation.

In short, we would wait for move above 4860 – 4880 for positive move or below 4765 for downtrend to resume.

Silver fall Predicted exactly 24 hours before - Waves Capital

Silver anticipated on 16th Nov 2011 (before 24 hours)

Silver Happened 17th Nov 2011 (after 24 hours)

Chart courtesy: Netdania

Silver fall of more than Rs. 3000 was predicted exactly 24 hours prior it happened in the short term update report of Waves Capital. We published this chart to our International commodity report subscribers. The above chart needs no explanation and even the low marked exactly after 24 hours was at $ 31 as forecasted in first chart by red line. It is simple a thrilling experience and wanted to share across with my readers!

Nifty at crucial Juncture!

Nifty 30 mins chart:

Nifty Daily chart

Nifty gave a gap down opening on Friday and failed to rally back for the entire session to close the gap. However prices managed to close at 5168 levels above the lower end of the support at 5160 we have been mentioning for some time now.

Nifty daily chart shows a doji formation which indicates indecisiveness. Given the rally in US and European markets on Friday it will be crucial to observe how our markets react to this and if we manage to open gap up & whether we will be able to sustain there during the day.

A failure to sustain above 5150 levels will break the strong support zone and will confirm next leg down towards 4800 and lower has started. If prices manage to rally from here we can move till 5260 the upper end of the short term channel shown in 30 mins chart.

In short, it is very crucial to observe how Indian markets behave today and whether it manages to move above 5260 or below 5150 for clear directional breakout. However, a move above 5260 will take it only towards 5350 and not more than that. Eventually the X wave will get complete in few more days if it is not already complete and a steep down move has to start sooner than later!

Nifty continues to consolidate! One more retest of 5390 plausible..

Nifty 30 minutes chart:

Nifty Daily

Nifty 30 minutes chart shows that there is hardly any movement in Nifty and the sideways action is continuing. We can see a short term blue upward channel and prices are moving well in that channel. We are at lower end of this band and prices should now start rallying towards 5350 levels as shown.

Nifty daily chart shows that prices have moved out of the blue channel but failed to move down. This happens when markets are just consolidating and we have been expecting that. We are optimistic for the level of 5350 – 5380 to be tested again on upside. However we do not see this move up as start of strong rally but to terminate from around 5400 levels at the top. A close above 5450 will however indicate the current up leg is extending further.

As we mentioned earlier, from wave perspective we can see wave Y is subdividing into double three combination with first standard pattern as zigzag followed by minute x wave and another standard corrective pattern either flat or triangle is forming.

In short, we maintain sideways action within the range of 5180 – 5380 over next few days. Bias for today remains positive with 5200 as crucial support level.

Sensex reached near 18000 in 15 days exactly as Anticipated!!!

Bottom Line: Sensex reached near 18000 in 15 days exactly as we were anticipating! Time Cycles cannot be more accurate than this…

Sensex Daily chart: Anticipated on 14th October 2011

Happened:

Sensex: Time Cycles:

We mentioned previously on 14^th October, “Everything is so systematic that it cannot be controlled or manipulated but humans by default exhibits this natural phenomenon and makes prices move within channel, following 15 days rally, that retraces 76.4% of fall, with each down leg having 3 waves, and each 3^rd wave forming positive divergences!!! 

If the same systematic approach continues the current rally is only in its 6^th day with approximately 9 more days to go and current up leg should also retrace 76.4% of previous down leg taking it near 18000 to 18300 levels which is also the upper end of the channel, 23.6% level of retracement level of entire rally since bottom of October 2008 (now act as resistance) and resistance line coming in from November 2009 lows (shown on 1^st chart). All these precisely converge together at 18000 – 18300 levels and this should be touched on 26^th October ( +/- 3 days).” Simply PERFECT!!!

On 26^th October, Indian equity markets were open for only 1.15 hour on account of Muharat trading and 27^th October was holiday. So ideally 28^th October becomes likely date for 18000 levels and index opened with a huge gap of almost 400 points that day making a high of 17908. This is in perfect sync with the symmetry we have observed.

It is now imperative to observe how Sensex reacts from current levels. A sideways consolidation forming a rounding type pattern has been seen during previous tops near the downward sloping trendline and so we can expect a similar sideways consolidation near 17900 – 18300 levels before the down leg starts!

Happy Diwali & Prosperous New Year!!!

Wish you all a very Happy Diwali and Prosperous New Year!!! Hope coming year provides better predictable opportunities...

Waves Strategy Advisors: Elite market Forecasting and Research House in India

About Waves Strategy Advisors:

Website: www.wavesstrategy.com

Linkedin / Facebook / Twitter: Waves Strategy Advisors

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Waves Strategy Advisors is one of the elite market forecasting and research house in India.  Waves Strategy Advisors  provides in depth analysis and forecasting of global markets across varied asset classes including Equities, Commodities, Currencies, Bond Yields. Analysts at  Waves Strategy Advisors  are qualified Chartered Market Technicians (CMT) & Chartered Financial Analysts (CFA) who employs unique techniques of Economic, Cycle and Intermarket analysis along with Elliott waves to derive at market forecasting ranging from hourly, weekly, monthly, annually and long term predictions for decades.

We also believe in educating and sharing of our unique combination of knowledge through different educational services provided by us.

Mission:

Provide Quality & Customized Research reports covering varied asset classes across the globe

Provide intraday trading suggestions for Equity, Currency and Commodity markets

Risk Management and Hedging advisory for firms exposed to Commodity and Currency fluctuations

Encourage and practice Intermarket, Cycle, Economic and Technical analysis in a professional and ethical manner.

Educate and train investors and public at large about scientific and systematic mode of investing and trading.

Vision:

We, at  Waves Strategy Advisors , believe that the market movements are structured and patterned in the form of recognizable and repeating “WAVES”. It is the psychology and emotions of the crowd that shapes & drives the overall movement across the freely traded markets and it is plausible to predict or forecast those movements using techniques of Elliott Waves. Intermarket Analysis combination along with Waves help in increasing the odds in our favor. Forecasting future and the flux of emotions running through minds of millions at the time of trading is uncertain but not completely unpredictable.

We believe in “QUALITY” in every part of our research & our Motto is “Trade Less, Risk Less, Reward Best”.

Our entire market forecasting team believes in “Quality” by giving even an intraday trade suggestion only when Risk is less and Reward is best. 

Sensex: Time cycles at its best, Sensex Blue Print!!!

Sensex Daily chart: Previously mentioned on 25^th July 2011

Happened: Low formed exactly in October 1^st week

Sesnex: Time Cycles

Sensex 69 days Time cycles was first shown on 25^th July 2011. The cycle low at that time was marked on 5^th October 2011. When we revisited this chart with updated data it was a thrilling experience to see a low precisely made on 5^th October 2011 at 15760. The very next trading day Sensex opened Gap up at 16222, a gap up opening of more than 450 points. Time cycles cannot work more precisely than this one.

This is a real challenge to the critics and who believes Indian markets are manipulated and controlled by few large players having insider information. If that is the case the question to ask is, Is there a Blue print laid out which shows that every 69^th day a bottom should be formed in Indian markets that give rise to a rally for atleast 15 days?? Every cycle bottom resulted in a rally that lasted on an average 15 days.

Apart from that the each rally retraced the previous leg by exact 76.4% retracement i.e. the next leg of rally after the fall moved up 76.4% of downfall.

Each down move was also extremely systematic. Every down leg had 3 sub waves to it, in which the 3^rd down wave came very close to the 1^st down wave (marginally above / below) and also each 3^rd wave was associated with strong positive divergences.

Sensex is also moving within the down channel very systematically. Every time this channel is touched prices reverses, up from lower trendline of channel and down from upper trendline of channel.

Everything is so systematic that it cannot be controlled or manipulated but humans by default exhibits this natural phenomenon and makes prices move within channel, following 15 days rally, that retraces 76.4% of fall, with each down leg having 3 waves, and each 3^rd wave forming positive divergences!!!

If the same systematic approach continues the current rally is only in its 6^th day with approximately 9 more days to go and current up leg should also retrace 76.4% of previous down leg taking it near 18000 to 18300 levels which is also the upper end of the channel, 23.6% level of retracement level of entire rally since bottom of October 2008 (now act as resistance) and resistance line coming in from November 2009 lows (shown on 1^st chart). All these precisely converge together at 18000 – 18300 levels and this should be touched on 26^th October ( +/- 3 days).

Caution: Cycles are good as long as it works and there are no prior indications for a cycle to stop working. We are assuming the current 15 days rally cycle and 69 days bigger cycle is intact. Please understand Time remains the most difficult aspect in forecasting and Risk management remains extremely crucial even if we have a high probability setup with n number of studies indicating the same thing.

Remembering Steve Jobs: Apple!

Remembering Steve Jobs (1955 – 2011):

Apple website states “Apple has lost a visionary and creative genius, and the world has lost an amazing human being. Those of us who have been fortunate enough to know and work with Steve have lost a dear friend and an inspiring mentor. Steve leaves behind a company that only he could have built, and his spirit will forever be the foundation of Apple.”

Apple Weekly chart

We did not have the opportunity to know Steve Jobs closely but his product and stock price speaks for everything he has done for Apple.  He indeed was a great visionary and innovator and revolutionized technology the way we see it today. World has lost a great thinker and Apple has lost the most precious asset to the company.

Apple weekly chart shows how Steve Jobs created true value for its shareholders. The stock was trading below $ 10 in 2004 and hit all time high at 422 just 2 weeks prior to Steve Job’s exit from the world.

Time will tell if Apple is able to manage without the great genius and progress the way it has in past six to seven years.

However Elliott analysis on Apple’s stock price and technical study are suggesting at least some consolidation or pull back (down) might be at hand from medium term perspective. Apple stock has moved in a well defined channel since 2009 with wave 1 extended as shown on the weekly chart. Wave counts are suggesting we have completed 5 waves up and there exists strong negative divergence. A move below 340 will provide first negative confirmation and the correction of the entire rally from 75 to 420 will then start.

This means the new CEO might face tough times convincing its shareholders that he can do the job well and with same dynamism / commitment that Steve entrusted him with. The long term trend remains intact - up for now but Apple might face challenging times from short to medium term horizon.

Will Nifty rebound strongly from here! Bank Nifty at crucial juncture!!!

 Nifty 30 mins

 Nifty Daily

Nifty 30 minutes chart shows a series of overlapping structure with strong divergences across various indicators on different time frames. It looks a perfect setup for prices to bottom out here and start rallying. However we have not yet received price confirmation. A move above 4820 will provide first positive confirmation and will produce strong positive divergence even on Daily basis. History shows that whenever we see divergences on Daily, 60 minutes, 30 minutes and smaller scale charts atleast some move is expected in opposite direction (up for now) over shorter term.
Please be aware that divergences might last longer than one can think of and so price is the ultimate deciding factor. Move above 4820 – 4830 is crucial.
Wave structure suggests we are in complex X wave formation and the current down move from 5180 to 4720 is just wave b of X and wave c will be 5 waves on upside after wave b is complete.
However a move below 4720 will increase the selling pressure and index might correct till 4600 if that is taken out. It looks a lower probable scenario as of now.
In short, we expect Nifty to bottom out here and might give a strong rally given the series of divergences but price confirmation above 4820 is important!

Bank Nifty 60 mins

Bank Nifty Daily

Bank Nifty daily chart shows that we are near the end of this downtrend. We might have completed wave Y or will be completing near 8400 levels. This is also lower end of the blue channel as shown on daily chart. A turn from here will be a surprise for many and might lead to a steep rise due to short covering. However we would not like to be in way of this strong downtrend but wait for any positive confirmation as buying opportunity since downtrend is in very late stages.
As seen from 60 minutes chart, we are seeing minor positive divergences in ROC and the structure looks like an ending diagonal. Individual stocks like ICICI Bank, SBI are also showing overlapping ending diagonal formations and positive divergences. A move above 8900 will provide first positive confirmation.
However avoid initiating longs unless prices start rallying up steeply as we might be just in a wave 4 of C (shown as alternate A-B-C in red on Daily chart). This scenario suggests C wave has one more leg pending on downside. Either ways the down trend looks in matured state.
Time cycles are also suggesting a reversal is very near and a bottom should be in place soon.
In short, wait for positive confirmations above 8900 with 8400 forming crucial support level!

World Markets! Pause before the storm!!

EURUSD is not cracking and is showing positive signs. We might start seeing a rally in EURUSD and so USDINR should be a good pick for down move. Wait for confirmations but my bias remains down for USDINR...

World currencies have stopped appreciating against US dollar and so USD may consolidate for a week or more.


German markets (DAX) is on verge of up move with strong positive break out of diagonal pattern and even Nikkei. Gold and silver are consolidating. so things look to have taken a pause before the storm!!!

Nifty moving in a wide trading range...

Nifty Daily chart

Bottom Line: Nifty had a strong day yesterday and closed up by more than 2.5%. It has become a norm for Indian markets to move by more than 2.5% every alternate day but in opposite directions!

Nifty witnessed a Big up day and rallied by more than 130 points. We were not expecting a deep move up and sudden “V” shape recovery across the globe. This exactly proves why Risk Management and Position sizing becomes extremely crucial during such times when markets move wildly in a range. Wave counts are very tricky for now and we might be forming a complex X correction.

We think prices are moving in a triangle pattern since the centre of triangle is most violent with gaps and no clear direction. It is often said to avoid trading a triangle and wild movements like this vindicate the old saying.

For now the short term bias has turned positive as long as today’s gap remains unfilled at 4912. The immediate resistance is now at the big down gap seen at 5060 - 5110. 5060 is also the upper trendline of channel and so it would not be taken out easily.

Nifty Biggest decline since 2008! DJIA pushed off the cliff !

Nifty Daily chart:

Bottom Line: Nifty also sold off in the Global Meltdown. This selloff in Global markets can be BIGGER than anyone can anticipate. Ideal candidate to go short is US market’s index – DJIA!

Nifty witnessed biggest drop since October 2008 and fall by more than 4% in single day. This is one of the biggest down close since the rally started in March 2009. We can clearly see from intraday charts that Nifty opened at exactly at our support levels of 5050 – 5030, traded there for couple of hours and then started the deep correction.

Indian Rupee saw one of the biggest decline against dollar i.e. USDINR pair rallied by more than 2% in a single day indicating heavy rush for US Dollars. Also Indian rupee is falling against Euro, GBP, JPY making it the weakest among the pairs. US dollar strengthening is true across the global currency pairs and people are putting money in US treasuries as safe haven and moving out from almost everywhere. We are in Global meltdown scenario and please do not initiate any long positions as the bounce can be steep but just short lived.

We are bearish on World markets including India. Volatility is going to increase and we hope to see a trending move which is a paradise for traders. Now can be the time when Indian markets hopefully start trending even if it is down but that presents very good opportunity for trend followers.

Next support level for Nifty is now near 4790 but when capitulation happen supports rarely holds. We might sound too bearish but we want to convey the intensity of recent selloff we are seeing globally and prepare our readers for the worse!

Friday’s are not good for Indian markets and history shows that steep selloff that starts on Thursdays usually continues till Monday – Tuesday.

Alternatively a rally back above 5050 will indicate we are just moving in a triangle thereby fluctuating the emotions from fear to hope and vice-versa. But this remains very low probability.

In short, we remain strongly bearish now given the intensity of fall in 1 day and look for 4790 as support and 5050 as resistance level.

Dow Jones Industrial Average Daily chart: (as on close of 21^st  Sept)

Above chart shows spot price of DJIA (US market as on close of 21st September). As we said before “NSE has launched DJIA futures contracts which help us to participate in the directional movement of US markets. The chart shows that we have fallen impulsively from 2007 to March 2009. This fall was either wave (A) or wave (1) of primary degree. After the downfall we rallied back in the form of 3 waves (W–X-Y). This upward correction looks complete at the top of 12780 on 21st July 2011. Since then we can see a steep selloff wiping off months of gains in just few days. This is the power of trending move and that was just wave 1 of primary wave (C). We shall very soon start wave 3 of primary wave (C). This wave we expect is going to be steeper than wave 1 and will be most violent wave. If our wave counts are correct wave 2 is almost complete or will get completed by end of this week then opening up wave 3 on downside atleast till 9500 – 9600 levels.”

We are looking at US markets offering better opportunity than Indian markets for traders as it is in a clear downtrend seen from above charts. DJIA by mid-day has already broken below 10700 levels thereby confirming start of next 3rd leg down. We do not think it will whipsaw again and re-enter into the channel above 11000 but we shall always be prepared for alternatives especially when volatility is very high.

In short, US markets look to have started 3rd leg down which is going to be steeper than the previous leg down. 11,000 should act as a strong resistance area and any close below 10700 will provide strong bearish confirmation.

Nifty should break above 5180 atleast this time! - Waves Capital

 Nifty Daily Line chart:

Nifty 20 mins chart

Line charts as shown on Daily chart can sometime reveal very vital information. We can clearly see higher lows and higher tops formation thereby indicating short term trend as positive.

From 20 minutes chart, we can see that we were moving in a triangle formation thereby forming a very difficult trading environment for past few days. Triangles are always challenging to trade and one should avoid trading them since all legs in a triangle are corrective.

We can clearly see a strong breakout in the form of wave c of this a-b-c upside move yesterday which is now headed above 5200 levels.

Immediate resistance comes in at 5177 but we are convinced it will be taken out on upside this time as more and more people are expecting this to hold. Also it has been tested quite number of times now to hold valid this time.

In short, the trend up remains strongly intact as long as 5070 is not taken out on downside for move atleast near 5300 levels.

Friday continues to be bad for the markets since past few months now!

 Nifty Daily chart:

Nifty 20 mins:

As shown on above charts, Nifty failed to sustain the rally and sold off steeply on Friday. We have been observing that Fridays have been bearish for the markets for many weeks now. The opening on Friday was flat but the selloff started in later part of the day and Nifty closed almost 1.9% down.

Trend over next 1 or 2 days looks to be down given the selloff across the sector but we would maintain our stand as this leg is wave ii of c and not fresh down trend. As long as 4994 is not taken out on downside we will keep current bullish count intact. A move below 4994 will indicate alternative scenario as wave c over at the top 5170.

We can observe that volatility has increased in Indian markets and the trends are smaller in either direction. This changes the market dynamics from rather than riding the trend for big profits but to keep booking the profits at every rise or vice-versa for the down trend. Indian markets have been very challenging and relative to global markets the movements in Indian markets make sense if we see it as leading other global markets.

In short, the downtrend might continue till 4994. We will watch how prices react from there and a decisive break below 4950 will indicate the uptrend from 4700 is complete at 5170 and next leg down has started. The up leg from 4700 – 5170 will then be marked as a complete X wave.

As long as prices take support at 4994 we maintain our stand as this is wave ii of c. A move back above 5100 will confirm resumption of uptrend till then watch for 4994 levels followed by 4950 on downside.

Nifty bucking global down trend! Looks positive!

Nifty Daily chart:

Nifty 20 mins
















Nifty is failing to sustain the down move and smartly recovered during later part of the day. We are looking at the current up move as an A-B-C of an X wave and we have started wave C up. Wave b looks complete at yesterday’s low but we would still wait and watch today’s action for further positive confirmation. The next resistance level lies at 5200 which is the open gap on the prior down move.

As long as 4977 level is maintained we are looking prices to reach atleast 5200 and possibly higher to close the big gap between 5200 and 5350.

Nifty is still not in sync with the global trend as of now and severe selloff across European indices over past few days failed to impact Indian markets. We maintain our stand of “cautiously positive” on Nifty as global markets are still exhibiting weak structure.