Waves Strategy Advisors: Nifty trading strategy

Waves Strategy Advisors: (www.wavesstrategy.com) Trading strategy on Nifty stated below is picked up from the “The Financial Waves Trading update” report published daily before equity market opens. We have mentioned past 5 trading strategies and what has happened on that day. This itself gives clear idea on what you can expect from this report.

Also, the below strategy is only one part of the Nifty report and what you also get is latest chart of Nifty with technical studies.  For subscribing to this report write to us on helpdesk@wavesstrategy.com or call on 9920422202.   

Strategy mentioned on 24^th July 2012 at 8:30 am

Strategy for the day:Longs can be created at current levels (5118 spot) if prices are able to sustain above 5110 during opening hours for a move towards 5140. A move above 5150 can take prices towards 5180.”

Happened on 24^th July:Nifty made a high of 5144 exactly near our target before finally closing at 5128 on 24^th July...

Strategy mentioned on 25^th July 2012 at 8:30 am

Strategy for the day: Longs can be created above 5140 level with day’s low as stop loss and a target of 5170. Any move below 5080 can be shorted with 5125 as stop loss and target of 5020 levels.

Happened on 25^th July: Nifty made a low of 5177 and reversed from there. It simply whipsawed around 5180 level and reversed. However the strategy did not go in favor because of 3 points on Nifty below the mentioned level.

Strategy mentioned on 26^th July 2012 at 8:30 am

Strategy for the day: Longs can be created above 5120 level with day’s low as stop loss and a target of 5140 - 5150. Any decisive move below 5070 can be shorted with 5120 as stop loss and target of 5020 levels.”

Happened on 26^th July:Nifty broke below 5070 level and came very close to the target zone of 5020 levels during final closing hours on 26^th July.

Strategy mentioned on 27^th July 2012 at 8:30 am

Strategy for the day: Nifty broke below 5070 level and came very close to the target zone of 5020 levels. For today, if Nifty opens gap up towards 5090 – 5100 levels, longs can be created with the gap as the stop loss for a move towards 5150.”BANG ON!!!

Happened on 27^th July:Nifty had a gap up opening exactly as expected and prices made a high of 5149.95 to be precise. We mentioned the target level to the point….

28^th & 29^th July was a weekend

Strategy mentioned on 30^th July 2012 at 8:30 am

Strategy for the day: For today, if prices have another gap up opening longs can be created with today’s gap as stop for a move towards 5160 – 5170 levels. A move below 5070 can be used as shorting opportunity for a target of 5030 with today’s high as stop loss.

Happened on 30^th July: Nifty had another gap up opening and prices closed near 5200 levels.

Nifty Elliott Wave structure...

Waves Strategy Advisors (www.wavesstrategy.com) Nifty moved exactly as we have been expecting. The below article is picked up from the daily publication of the equity research report “The Financial Waves” which was published today morning before equity markets opened. The report uses indepth Elliott waves research along with other technical tools. Write to us on helpdesk@wavesstrategy.com to subscribe NOW and see yourself where we think Indian markets are headed over short to medium term along with price and time predictions….  

Bottom Line: Nifty made a low near the crucial support zone of 5015 – 5050 we mentioned before. It is important for prices to protect 5015 on downside for a move up towards …….

Few of the wave counts are purposely deleted and blurred out for this free update.

Nifty Daily chart:

Nifty 60 mins chart:

The following was published on 27^th July 2012 morning before equity markets opened.

Wave Analysis:

We mentioned before on 26^th July morning before market opened, “The channel support is decreasing on daily basis and the support now comes near 5070 levels. Any move below 5070 will indicate wave v is extending and prices can head towards 5050 to 5015 levels. A move above 5122 can take prices towards 5140 – 5150 levels….”

Nifty opened near 5125 levels, exactly near the level we mentioned as important on upside. Prices failed to sustain there and was moving in the range 5085 and 5100. However later during the day prices broke below 5070 and the selling pressure accelerated. We mentioned previously that break below 5070 will break the lower end of the channel on downside and selling pressure will intensify. As soon as 5070 was taken out prices moved steeply towards 5030 levels between the range of 5015 – 5050 we have been mentioning.

Nifty has clearly moved down in 3 waves in the form of …… as shown on 60 mins chart. However this has completed only wave ….. of the correction and wave …….. on upside should start. Since ……. was only 3 waves and not 5 waves the correction in …….. is unfolding in the form of Flat. Flat corrections have first wave as 3 waves followed by wave b again 3 waves and wave c in 5 waves. Wave b of a flat should retrace minimum 61.8% of the downleg and can even retrace 1.618% of A (running flat). It is difficult to say as of now how much ……………. However at minimum prices should head towards ………… if wave …….. starts today… Also as wave …………. has taken around 11 days this up leg can last between …………………… days. Next few days of action will provide vital information as to what pattern wave …….. probably forming.

Positive confirmation will be obtained if prices can take out 5100 level today. Also if there is a gap up opening the gap should not be filled during the day.

In short, sustaining the gap up opening during first few hours of trade and move above 5100 will provide positive confirmation that wave ……………… can move towards ………… levels or ……………

Write to us NOW on helpdesk@wavesstrategy.com to see the missing wave counts and text…. 

Applied Elliott waves research: Tatasteel

The below chart of Tatasteel shows Applied Elliott wave theory at its best. 5 waves move up was a rare event in 2011 since the entire Indian market was moving in a complex correction. Beginning of 2012 got us with impulsive up moves in few stocks. Tatasteel is one of those stocks and it exhibits what an ideal impulse wave should look like. Not only this stock has followed the 3 important rules but also most of the guidelines as well.

 Tatasteel Daily chart:

Rules of Elliott wave:

a. Wave 2 cannot retrace complete of wave 1
b. Wave 3 cannot be the shortest of waves 1 and 5
c. Wave 4 cannot enter into territory of wave 1

All of these rules have been followed.

Guidelines of Elliott wave:

a. Wave 3 is usually the longest and can be 1.618 / 2.618 times of wave 1 or larger if extended
b. Wave 4 will usually form a triangle
c. Wave 3 if extended, wave 1 and wave 5 will trend towards equality
d. Wave 5 and wave 3 will usually show negative divergence which indicates loss of momentum and break of 2-4 trendline will confirm impulse 5 waves up is over and 3 waves downside correction has started.

Each of the above rules and guidelines is well observed in 60 minutes chart of Tatasteel. This is the power of Wave theory where one can predict the future action and what path prices will follow.

We have been predicting this movement as and when it was developing. This is indeed a thrilling experience. Subscribe now to our Daily research publication and see yourself what does Indian major index – Nifty is showing along with 3 stocks selected on opportunity basis. Also learn the power of Elliott wave and see how it works on realtime basis. Write to us on helpdesk@wavesstrategy.com for more information.

Nifty path ahead...

Bottom Line: Nifty failed to take support near 5150 levels and moved down towards 5100.

Nifty Daily chart: 

Nifty 60 mins chart:

Scenario :

Nifty 20 mins chart:

Wave Analysis:

Nifty failed to find support near the 5150 levels. This increases the possibility that the scenario 2 we showed before is a higher probability scenario.

Nifty had a gap down opening of more than 40 points and prices did not make any attempt to close this gap. Also the advance decline ratio was strongly in favor of bears. However, Midcap and Smallcap index did not see strong overall selloff and these indices corrected by around 1.2% to 1.3% when the major index corrected by more than 1.5%.

Nifty daily chart, shows the path we expect markets to follow over next few weeks. Prices can move in sideways action for a few days between 5100 – 5170 levels. We can then expect a bounce back till 5250 – 5260 levels and after that prices can again retest 5100 – 5050 levels. Daily chart shows this path. However failure of prices to find support near 5050 to 5000 zone will be strongly bearish and will challenge the current wave structure we are showing.

As shown in Nifty 20 mins chart, prices are now near the lower end of the channel support. From here there can be attempt to move in sideways action for a while and test of upper end of the channel near 5140 – 5150 levels. A break above this channel will open up move towards 5170 – 5180 levels.

In short, we expect the downfall of yesterday should get arrested around 5100 levels. A close below this level will take prices towards 5000 – 5050. On upside 5170 should act as resistance over short term. Prices can move between 5250 – 5050 over next few weeks.

Waves Strategy Advisors: USDINR Path ahead!

Waves Strategy Advisors (www.wavesstrategy.com) 

Bottom Line: USDINR could complete wave b of 2 very soon and can result into short term up move. This article was published in The Forex Waves short term update report. Write to us on helpdesk@wavesstrategy.com for subscribing to this alternate day publication.

USDINR Daily chart (July contract):

USDINR 60 mins chart:

Wave Analysis:

USDINR moved as expected, prices opened with a gap down and drifted lower till 54.90 levels in the form of wave b of 2.

As shown above in 60 mins chart, minute wave b of 2 took more time to correct the previous wave a of 2 and still not able to breach the previous low of 54.50. So we expect prices to end minute wave b of 2 near 54.50/54.30 levels and could start the next leg on upside over medium term.

In short, it will be difficult for prices to breach the previous low of 54.50 over short term. Later, sustainable move above 55.35 will provide the bullish opportunity till 56.20 levels.

Please remember the medium term trend for USDINR is down and after wave 2 is complete we expect wave 3 to start on downside taking prices towards 53 levels or lower. For more information write to us on helpdesk@wavesstrategy.com

Waves Strategy Advisors: Nifty Crucial Levels!

Nifty Happened Scenarios:

The below excerpt is picked up from the “Financial Waves Short term update” report which is published daily before equity market opens. The below article itself shows the accuracy of levels we have been mentioning over past 3 days. For more information about this report write to us on  helpdesk@wavesstrategy.com

Nifty 60 mins chart:

Published on 16^th July 2012:

Published on 16^th July 2012 before 8:30 am : It is now important to see if prices can manage to bounce back from the crucial support of 5200 – 5190 level. This level is an intersection of 2 trendlines as shown in the above charts. Intersection points are very important and mark the turning points atleast over short term.

Happened on 16^th July: Nifty made a low of 5190.45 and closed at 5197. Prices touched 5190 almost to the point and did not break it.

Nifty 60 mins chart:

Published on 17^th July 2012:

Published on 17^th July 2012 before 8:30 am : We now expect prices to bounce back from here and move towards 5260 – 5270 levels over short term. 5150 - 5190 level was acting as strong support zone previously in the months of March – April & it acted as a strong resistance in the month of June. Now this zone should act as a strong support and prices shall bounce back from here…. A move below 5180 will be bearish…

Happened on 17^th July: Nifty made a low of 5181 yesterday and managed to close above 5190 level. The high made during the day was 5237.

Nifty 60 mins chart:

Happened as on 18^th July 2012 EOD:

Happened on 18^th July: Nifty managed to close above 5180 – 5190 level and made a high of 5223 on intraday basis. Prices have so far defended the important level of 5180 – 5190 on closing basis. For subscribing to this equity report write to us on helpdesk@wavesstrategy.com.

Waves Strategy Advisors: Nifty Scenario Analysis!

Following is published in Financial Waves, a daily publication on Indian Equities. Write to helpdesk@wavesstrategy.com for more information...

Bottom Line: Failure of Nifty to show momentum in the 3^rd leg opens up couple of probable scenarios…

Nifty Daily chart: 

Nifty 60 mins chart:

Scenario 1

Scenario 2: 

Scenario 3:

Least preferred

Wave Analysis:

We mentioned in previous update, “In short, a move above 5350 will indicate resumption of uptrend and any move below 5290 followed by 5257 will make the pattern very complex opening up number of probable scenarios.”

Nifty had a Gap down opening of almost 60 points and opened near the crucial level of 5257 that we mentioned as crucial. However later in the day prices failed to sustain near that level and drifted lower towards 5220 levels. Failure of Nifty to show momentum on upside, opens up number of probable scenarios

Nifty daily chart shows that prices decisively closed below the channel support which we mentioned as important. Prices can now find support near the 200 days moving average at 5110 levels.

We have shown Nifty scenario analysis showing 3 different scenarios in the order of preference and probability.

Scenario 1: The first scenario suggests that wave ii is not yet over and is still developing in the form of running correction. To accommodate Time – wise correction we can have minor wave i at the top of 5180 and wave ii is ongoing which can end anywhere between 5150 to 5220. This is the most bullish scenario and wave x being almost 2.618 * wave w. Wave y can take couple of more days to complete before finally opening up wave iii on upside.

Scenario 2: This scenario suggests that 5 waves impulse on upside is over and prices have started correcting in wave 2. If this scenario is valid then Time – wise the correction will take more than a month and prices can move between 5000 to 5300 levels. This scenario will be very much challenging from trading perspective as it will be complex overlapping formation lasting for more than a month in a range of 5000 – 5250/5300. If this scenario is valid buying on supports and selling on resistances strategy should be adopted.

Scenario 3: This is the most bearish scenario and suggests the entire move up either corrective A-B-C or an Ending diagonal. If scenario is valid there can be some steep correction expected and prices can head towards 5000 level very quickly. However this is the least preferred scenario given the strength in Midcap and Smallcap sectors and there is no loss of momentum as seen from RSI indicator. In case of wedge, there should be some serious loss of strength on upside which is not seen here. So we keep this scenario as least preferred.

Existing positional longs can keep 5190 level as stop given the strong channel support coming in that region.

Next few days of action will clarify which one of the above 3 scenarios are valid. Till then keep your emotions under check and reduce the exposure as we have cautioned before changing the mindset from extremely bullish to neutral stand will take sometime and markets can be extremely dynamic and fast.

In short, over short term expect some range bound movement between 5190 – 5300 levels. Move above 5350 will open up scenario 1 and resumption of wave iii on upside. Move below 5130 will make Scenario 2 / 3 as valid options. 

Nifty at crucial Juncture!

Bottom Line: Nifty closed at important level and managed to defend the 5250 level. 1-2 days price action is very crucial!

Nifty Daily chart:

Nifty 60 mins chart:

 Nifty 20 mins chart:

Wave Analysis:

We mentioned in previous update, “We will now advise following an aggressive stop of 5250 on Nifty as move below it will also break the blue channel shown on 60 mins chart and we will be forced to adopt a bearish / neutral stand!”

Nifty had a gap down opening and made a low of 5258 on intraday basis. As shown on daily and hourly chart, prices have managed to close just above the channel we have been showing for more than a week. There was more deterioration seen in the Advanced Decline ratio and Smallcap &  Midcap indices underperformed the major index.

It is now extremely crucial to observe if Nifty manages to close above the 5250 level. Many of the stocks closed yesterday at crucial supports and selling pressure can intensify below 5250 which can then take index back towards the trading range of 5190.

Nifty 20 mins chart clearly shows that the decline is also very well channelized within red channel and there is a strong support coming in at 5250 – 5260 level from the extended trendline of previous consolidation.

In short, Nifty is now at make it or break it juncture. Weakness below 5250 can take prices towards 5190 levels and this will open up number of equally probable scenarios. Any move above 5330 will be positive and will indicate resumption of uptrend towards 5600 level.

Nifty gave a break above 5200 to head higher towards 5600!

Bottom Line: Nifty ended last day of the June in a spectacular way with a strong breakout above 5200 as expected!

Nifty Daily chart:

Nifty 60 mins chart:

Wave Analysis:

We have been constantly saying in our updates that the major trend for Nifty is up and a move above 5200 will strongly confirm start of next leg up. We have also re-iterated many times that important resistance or support levels are usually taken out with Gaps and we can see the same thing has happened on last trading day of the week and month. Prices have formed a strong base between 5030 and 5190 levels in form of wave ii and gave a strong breakout above 5200.

For long positions we have been constantly saying to follow a trailing stop of 5030 and 5090. Prices did not come below 5090 crucial level since we mentioned and never attempted to come near 5030.

Time wise wave i has taken 51 hours and wave ii has taken approximately 80 hours. Time wise wave ii = 1.618 * wave i. It is a thrilling experience to see how perfectly Time is also following Fibonacci ratio let alone the price.

As shown on 60 mins chart, we have now drawn a blue channel that connects the 0-ii line and a parallel line from wave i. This channel now should be respected and prices can find resistance around 5400 levels.

If we project wave i on upside the first target that we get is around 5370 - 5400 levels. If wave iii is extended the target comes to around 5700 levels (wave iii = 1.618 * wave i). Wave i looks perfectly subdivided and so wave iii might be non divided and can produce a strong thrust on upside. However it is too soon to comment the formation of wave iii as of now and followup rally after Friday’s action is important to observe.

As long as the Gap of Friday between 5150 and 5225 remains unfilled we will stay bullish.

The rally has been associated with strong reversal in INR and all currency pairs have moved perfectly as expected.

We now expect high beta midcap and smallcap sectors to catch up with Nifty. Failure to do that will be a first warning sign. The breadth of the market looks very good as on Friday with more than1800 stocks advancing against only 980 declining. We will warn our readers if we see any cautious signs from high beta sectors or deteriorating advance decline ratio.

Please note the alternate possibilities as shown in red on the daily chart, suggesting the current up-move as only a 3 wave up with wave c ending anywhere between 5370 to 5400 levels. Slower momentum in the current up leg as compared to that of wave i will help us to judge if this alternate possibility is developing. Either ways the bias is strongly up for now whether the rally is in wave c or wave iii on upside.

Positional traders can now trail their stop towards 5170 levels.

In short, the bias is firmly positive for now and Nifty can move towards 5370 – 5400 levels at minimum as long as 5170 is intact on downside. A break above 5400 will open up possibilities for 5600+ Any move below 5170 will be bearish and will force us to adopt alternate possibilities.