Applying Fibonacci Series in Stock Market..

Applying Fibonacci Series in Stock Market

Following article is published by Waves Strategy Advisors. For more information visit www.wavesstrategy.com

Fibonacci numbers are commonly used in Technical Analysis with or without knowledge of Eliott Wave analysis to determine potential support, resistance, and price objectives. The Fibonacci series is a numerical sequence comprised of adding the previous numbers together, i.e. (1,2,3,5,8,13,21,34,55,89,144,233 etc..). 

An interesting property of these numbers is that as the series proceeds, any given number is 1.618 times the preceding number and 0.618% of the next number.

Following properties are usually used for Fibonacci retracements:

·         38.2% retracement is common in wave 4

·         61.8% retracements is common in wave 2

We find these numbers everywhere in nature as well as stock market.If we look closely, we can see patterns in almost everything around us. Some of the examples are shown in the below picture

The price movements of financial markets are also patterned, and Elliott wave analysis gives you the tools to interpret those patterns. Once you understand the Fibonacci sequence, it's easy to apply it to the markets you trade.

The below excerpt is from our daily publication of Equity report- “The Financial Waves Short term update” which gives a clear picture of how well Fibonacci is applied along with Elliott waves.

BHEL 120 mins chart:

Waves Analysis:

As shown above in 120 mins chart of BHEL, from October to December 2012 prices have been moving in a range of 220-250 levels.  61.8% retracement of the previous up move from 195 to 275 levels comes near 220 levels. Three times prices have approached this level and bounced back on upside. This is the strength of Fibonacci retracement level of 61.8% which has worked precisely in this stock.

To know what we expect from here and how to forecast using Elliott wave and Fibonacci projections subscribe to daily research reports in Equity, Commodity & Currency or register for Distance learning training module for Elliott wave by writing to us at helpdesk@wavesstrategy.com or you can call us on +91 9920422202.

Ashish Kyal CNBC TV 18 Tips on Silver by Waves Strategy Advisors 28th De...

Tips on Silver on CNBC TV18 by Ashish Kyal of Waves Strategy Advisors. For subscribing to commodity research visit www.wavesstrategy.com or write to us at helpdesk@wavesstrategy.com

Ashish Kyal Tips on Silver CNBC TV 18 Waves Strategy 27th Dec 2012

Ashish Kyal Tips on Silver CNBC TV 18 Waves Strategy 27th Dec 2012. For more information on subscribing Commodity research visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Tips on Silver Ashish Kyal Waves Strategy CNBC TV18 26th December 2012

Tips on Silver Ashish Kyal Waves Strategy CNBC TV18 26th December 2012. For more information visit www.wavesstrategy.com or subscribe to daily research reports and calls by writing to helpdesk@wavesstrategy.com

Tips on Gold CNBC TV18 Ashish Kyal of Waves Strategy 24th December 2012

Tips on Gold by Ashish Kyal, CMT of Waves Strategy Advisors

For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty Elliott wave count - continues sideways action on year end!

To subscribe to this daily research report that gives Nifty along with 3 different stocks Elliott wave counts write to us at helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

Bottom Line: Nifty has been moving between the levels of 5840 and 5950 we have been talking about all the while!

  

Nifty Daily chart:

Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “Prices managed to cross above 5925 on Wednesday but failed to sustain there yesterday and closed negative. The upper end of the Bollinger Bands® is now near 5950 levels and a close above this level will be important for short term positivity. In short, expect range bound movement between 5840 and 5950 to continue for few more days before a clear trend can emerge.”

Nifty had a gap down opening of around 20 points on last day of the week and closed down by more than 1%. Prices have constantly failed to close above 5950 or below 5840 and all this while we have mentioning to wait for confirmation before initiating positional long positions.

As shown on the 60 mins chart, wave ii of wave 5 has so far taken only 1.5 times the time wave i took. This keeps the possibility open that correction can extend in current week as well.

The current wave structure and medium term bias will remain positive as long as prices stay above 5700 levels. Move below 5700 will indicate that either wave 5 is complete at the top of 5930 or is forming an Endging diagonal (Wedge) pattern.

On Friday, prices have closed exactly near the support of 5840 after making a low of 5842. As we have mentioned before important support or resistance levels are normally taken out with Gap. A gap down opening below 5840 can take prices towards 5800 – 5790 levels. However, if prices sustains above 5850 – 5860 levels then a move back towards 5900 can be expected over short term.

In short, 5790 level should provide important support to prices if 5840 breaks. A close above 5950 will be required to confirm that next leg up has started towards 6130 or higher.

Nse Midcap Index: Elliott wave counts

Nse Midcap Index: Elliott wave counts

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Even on NSE Midcap Index Elliott wave counts worked very accurately. This index provides information for the movement of Midcap stocks in the Indian Equity market. Similar to Nifty, prices were moving higher in the upward moving blue channel and we have been perfect in capturing this rise from 7650 levels which can be seen below in the daily chart.

The below excerpt is being picked from our daily published Equity report " The Financial Waves STU" of 21st December,2012.

NSE Midcap Index Daily chart:

Anticipated on 29^th November 2012:

Happened:

Waves Analysis:

We have mentioned in the previous update of 29^th November 2012, “7650 will act as a strong support. As long as prices sustain above this level our bias is positive and prices could test the resistance of 8100 level over short term. Further sustainable move above 8100 will start the trending move on upside”. BANG ON!!!

NSE Midcap index moved perfectly as expected. At the end of November 2012 prices have taken support near 7650 levels, thereafter constantly for 12 trading session prices closed above the previous day low and made a high of 8495 in the last week.

As per wave perspective, prices have completed minor wave iv near 7650 levels and currently it is moving higher in the form of minor wave v of intermediate wave C. Indeed, prices are moving in the final leg of wave C and exhibit the negative divergence. But we will not try to catch the top and wait for negative confirmation which will be obtained below 8280 levels over short term.

Same as Nifty, Nse Midcap index is consolidating between the range of 8280-8495 levels from last few trading sessions. In the previous trading session prices have arrived near the previous high of 8495 and upper end of the channel. Looking at broader market it seems that prices can continue the sideways action for few more trading days and then it will resume the uptrend.

In short, 8280 will act as a support and 8495 as an immediate resistance level. Sustainable move above 8495 will not only break the channel on upside but also resolve the uptrend. However, move below the support of 8280 could take prices lower till the next support of 8100 levels.

RBI Monetary Policy: Repo Rate unchanged!

Following was published in "The Financial Waves" research report by Wave Strategy. For subscription write to helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

Bottom Line: Nifty hovered near the support of 5840 level. RBI monetary policy will provide the direction ahead.

The following was published in “The Financial Waves STU” on 18^th December 2012 before equity markets opened.

12M Government Bond Yield:

Above is the chart of 12 Month Government Bond yield.  We use this chart to predict the next action of RBI monetary policy on repo rate. Generally, Bond markets act as a leading indicator for the government action. Last policy was announced on 30th October 2012 in which we have been right on no rate cut in repo rate.

Looking at chart we find no major movement in 12M bond yield and hovering near 8.02. In the last monetary policy bond yield were moving near same level and we did not have repo rate cut. So it is highly possible that today RBI will not cut repo rate in monetary policy.

It will be important to observe if Bond markets have been right even this time in predicting no repo rate cut and the reaction by equity markets after the announcement.

COMEX and MCX Silver: Trading using Elliott Wave

COMEX and MCX Silver: Trading using Elliott Wave

By Waves Strategy Advisors, www.wavesstrategy.com

This article on Silver explains how “The Commodity Waves Short Term Update” uses objective Elliott wave analysis as well as Technical Tools to navigate the near-term trend changes in Silver.

We have mentioned in the previous update on Comex Silver that, “It was the sixth trading session and till now prices failed to closed above the bearish candle which was formed last week. This slow retracement signals negativity for this commodity and prices could move lower till the support of 32.50 or even lower in the coming days”. BANG ON!!!

Comex Silver chart:

Comex Silver moved lower as expected. Prices breached the support of 32.50 level and made a low of 32.25 level. Yesterday it has formed a bearish candle and resumed the downtrend. In near term, 33.20/33.30 will act as a strong resistance level. Any move on the upside will provide the bearish opportunity and prices could move lower till 61.8% of retracement of 32.10/32 level.

MCX Silver chart:

Wave counts and important levels in MCX Silver have been hidden purposely as it meant for paid clients.

Similar to MCX Gold, MCX Silver opened on a lower note, in the early market hours it has breached the support of 62500 levels decisively and moved below the previous low of 61600.

As per wave perspective, double zigzag corrections have evolved into triple zigzag pattern connected by wave x. This indicate further………….Opportunity arrives.

To know the further opportunities of tomorrow which might look random today, Subscribe to Waves Strategy Advisors daily forecast with complete price levels, targets and future trend forMCX and COMEX Gold, Silver and other metals.

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India VIX index! Nifty continues to move in corrective non trending fashion!

The following article was published in "The Financial Waves" today morning report by Waves Strategy Advisors (www.wavesstrategy.com)

Bottom Line: Nifty continues to do what it has done in most of 2012 i.e. moving in corrective non trending pattern. 

Nifty Daily chart: 

 Nifty 60 mins chart:

NSE VIX index:

Wave Analysis:

We mentioned in previous update, “The internal wave counts for this minor wave 5 is very tricky and so we will wait for prices to either break below 5840 or close above 5950 to provide short term direction. Only a move above 5980 will indicate that wave 5 is extending whereas a move below 5840 will open possibilities of 5790. A move below 5700 will indicate that a major top is in place at current highs. In short, expect range bound movement to continue unless we see a clear directional breakout which is expected this week. Please maintain strict stop loss and follow money management prudently in case there are any sharp reversals.”

Nifty had another range bound movement. Prices opened near 5917 and moved between 5925 and 5874 with no trending move. It just oscillated around 5900 levels throughout the day.

Smallcap and Midcap sectors managed to close marginally positive and the overall breadth was equally divided between advancing and declining stocks.

We are showing NSE Volatility index (VIX) that represents markets expectation of volatility over next 30 days. In simple terms this index helps to understand how much prices are deviating from the mean. Normally, volatility reduces with increase in prices as prices tend to move along with mean whereas during down moves which are steeper prices tend to move away from means. However this condition is not necessary and when breakout happens after a range bound movement volatility can increase along with increase in prices as well. Case in point is Indian VIX recorded its lowest value of 12.87 on 22^nd October 2012 since inception in 2008. Prices have not given any strong trending moves and this index itself suggests that. During the entire period of 2012 VIX has been constantly moving down. Such low VIX values are not conducive for Option traders and also indicate no strong trends in either of the directions.

For now pickup in VIX along with breakout in Nifty either above 5980 or below 5840 will provide confirmation of trending move over short term. Markets cannot continue to move at such low VIX values for extended period of time and 2013 will hopefully provide better trending moves as compared to 2011 & 2012.

In short, wait for Nifty to break below 5840 or above 5980 to give a clear directional move. Wave counts over short term continue to be everyone’s guess and we will need more price movement to clarify it over short term.

Trading Nifty using Bollinger Bands® & Elliott wave

Trading Nifty using Bollinger Bands & Elliott wave

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Bollinger Bands work very precisely during corrections and Elliott wave helps us to understand when it is better to apply this technique for getting high probable trade setups.

The following was published in yesterday morning report. When Nifty was touching 5840 level in a steep fall many would have created short positions or would have exited their long positions. But our readers were aware about the crucial level of 5840 on closing basis. The below excerpt explains it all….

Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “There can be a possible Gap up opening today as LokSabha approves FDI in retail. It will be now important to see if market manages to sustain into positive territory throughout the day. Existing long positions can now trail their stops to 5840 level on closing basis which is the lower end of the Bollinger Bands and is also the low made on 3^rd December 2012.  Conservative traders can use 5790 as stop loss level for their long positions. In short, expect range bound movement to continue as long as 5850 is intact on downside and 5950 is intact on upside.”

We have been very precise in capturing the short term to medium term movement on Nifty. Nifty had a Gap up opening as expected but failed to sustain there and turned lower. As mentioned in previous report we advised our readers to keep 5840 as stop loss on closing basis and Nifty made a low of 5839 and reversed from there. Also when markets have been making low in wave 4 near 5550 we have been talking about 5950 levels. The high made by Nifty was 5943 yesterday. From trading perspective the initial up move of 200 points from 5600 was very fast but there were opportunities in stocks that started rallying later.

We continue to use Bollinger Bands unless a clear trending move resumes on upside. Bollinger Bands provide important supports and resistance levels during corrections and it starts moving along with price during trending markets.

For today…………

To know the further trend of Nifty as well as which stocks are trending when Nifty is moving sideways Subscribe to our Equity Research Report “The Financial Waves Short Term Update”which is published daily before the market opens. To subscribe write to us at helpdesk@wavesstrategy.com or call on +91 9920422202 or visit www.wavesstrategy.com

Nifty near 5950!!! Long term forecast!

Nifty today touched 5943 levels during closing hours. We have been talking about 5950 levels when it was at 5550 and have been very accurate in forecasting this up move.

The following article is taken from "Financial Waves Short term update" published on 3rd December research report which is published on daily basis by me. For more information on subscribing visit www.wavesstrategy.com or write on helpdesk@wavesstrategy.com

Nifty Long Term Wave counts

Long to Medium Term analysis:

We are showing Nifty weekly chart that shows the long term wave counts of Indian equity markets. As we have mentioned before, since the start of 2008 prices have been moving in complex corrective pattern. The entire wave down from the top of 6357 to 2253 has formed the first leg [W] of this complex pattern. The move up since then from 2253 to the high of 6339 is wave [X]. We were expecting this entire rally as impulsive before but looking at the time taken for this up leg to retrace the complete of down move of 2008 makes this leg as wave [X] more probable. Prices are currently in primary wave [Y] of complex correction and has so far completed only intermediate wave (a) on downside. The up leg (b) (shown in detail on daily chart) is forming a flat corrective pattern on upside. In this intermediate wave (b) prices have so far completed minor degree wave a and b and is now in wave c.

In minor wave c prices have completed wave 4 at the low of 5548 and is now moving up in wave 5. As we have mentioned before 5920 to 5950 levels form an important level since there are cluster of resistances at that level as shown in above chart. However, wave 1 and wave 3 has taken approximately 5 weeks and so wave 5 should take atleast 2 to 3 weeks to match the degree. Nifty is already near 5880 and there is still much time left for wave 5 to complete. This increases the odds that wave 5 can be extended and move towards 6500 levels. Also current weekly bar shows one of the steepest advance and there is no loss of momentum as of now. As we have mentioned before important resistance levels should be taken out with gaps and to clear 5920 to 5980 resistance zone Gapping action will be required.

However it is now imperative to see how prices are reacting from these levels before raising our targets. We are closely monitoring the pulse of Indian equity markets!

Nifty Daily chart:

Nifty 120 mins chart:

Wave Analysis:

We mentioned in previous update, “Current expiry had been different than the previous past few months, as expiry days had been quiet with relatively narrow range bound movement. For existing long positions follow trailing stop method. 5710 on downside is ideal place for placing a sell stop order for long positions.”

Nifty continued to move up for 3 consecutive days with no loss of momentum seen yet. As we have mentioned in our weekly outlook prices are now heading towards the resistance zone of 5920 – 5970 levels. It will be important to observe how prices will react from here.

For confirmation of wave 5 to complete we will require that the low of 5650 should be taken out in less than 3 days which looks highly unlikely and so there is much potential left for this up leg to continue.

The Advance decline ratio and high beta sectors continue to be healthy as of now. First sign of weakness should be seen in these sectors when a major top is being formed unless it is in the form of euphoria!

Our readers who are following trailing stop method please trail your stops for long positions towards 5780 levels.

In short, our bias continues to be firmly positive on Nifty with immediate resistance near 5950 levels.

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Trading MCX Copper using Channels and Elliott Wave

Trading MCX Copper using Channels and Elliott Wave

For more information visit: www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

MCX Copper continues the uptrend in the channel as expected. Channeling technique is working precisely for copper as it is moving within the channel forming higher highs and higher lows.

In our previous update of our daily publication we had mentioned that “The uptrend looks to be intact and one minor push towards 447 looks plausible. The entire range of 445 to 447 becomes strong resistance on upside and for up move to continue further a decisive close above 448 is required. A move below 442.50 will confirm that it is headed towards 440 levels over short term. Any close above 447 can increase the buying pressure.”

The below chart of copper MCX Copper 60 mins chart (February Contract) shows how precisely copper had moved as per our expectation.

Copper has been moving exactly as expected. Prices made a high of 447.70 but failed to move above 448 levels. It then finally closed at 446. The channels have worked precisely for Copper so far.

To know the further trend of MCX Commodities like Gold, Silver, Copper, Crude Subscribe to our Daily Publication of “The Commodity Wave Short Term Update” and stay ahead from the crowd. 

Trading EURUSD - Forex Charts & Analysis

Trading EURUSD - Forex Charts & Analysis

By Waves Strategy Advisors (www.wavesstrategy.com)

To take trading calls based on Elliott Wave it is important to recognize the patterns formed and act wisely.

One such example is EURUSD pair which has formed triangle pattern as shown in Weekly Chart below.

EURUSD Weekly Chart:

EURUSD Daily Chart:

Wave Analysis:

As shown above in weekly chart of EURUSD, in the month of October 2008 prices have made a lifetime high of 1.60 levels, topped out near the same level and fell violently. After a steep fall, since last four years (2008-2012) prices witnessed a strong consolidation in this pair between 1.50 – 1.20. 

As per wave perspective, prices are moving in corrective fashion since 2008. As shown on daily chart, it seems prices are moving in complex corrective pattern. In the month of July 2012 EURUSDcompleted wave A of second correction near 1.20 level and started the next leg on upside in the form of wave B.

We can observe above in daily chart, prices have breached the red sloping channel on upside and formed an Inverse Head and Shoulder (H&S) pattern. Neckline comes near 1.3150 levels. However, it is important to wait for neckline to be broken on upside for Head & Shoulder pattern confirmation. On downside 1.2635 will act as important support and a break below this level will change the trend to down.

In short, as long as 1.2635 is protected our bias is positive. Break of 1.3150 level will resume the uptrend and prices could move higher till 50% of retracement of 1.35 levels in the coming trading sessions.

To know more about Trading Forex markets write to us at helpdesk@wavesstrategy.com or call us at +91 9920422202.