RBI Monetary policy: No repo rate cut as expected by Bond market…

RBI Monetary policy: No repo rate cut as expected by Bond market…

The following was published in “The Financial Waves STU” on 30^th October 2012 before equity markets opened by Waves Strategy Advisors. For more information visit www.wavesstrategy.com

Bottom Line: Nifty sustained above the support of 5620 and formed blue bar. Reaction to RBI monetary policy will provide further information.

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 17^th September 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 7.95. 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 todayRBI 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.

Nifty Elliott wave count, Channels & Pattern

Nifty Elliott wave count, Channels & Pattern

Bottom Line: Nifty continues to move within wave 4 consolidation. A range bound activity confined between 5720 – 5620…

Nifty Daily chart: 

Nifty 20 mins chart:

 Wave Analysis:

We mentioned in previous update, “In short, a close above 5725 will be positive and indicate an upside breakout whereas a move below 5685 will give short term negative direction towards 5630.”

Nifty moved exactly as expected. Prices broke below the short triangle shown on 20 mins chart and moved down towards the support area of 5630 – 5650.

It is now 14 days and prices have not closed above 5720 or below 5630 during this entire period of sideways action. It has been boring trading environment and many of the stocks in midcap space is also moving sideways. For a trending move to start it is imperative for prices to either break above 5720 or below 5620 levels.

From wave perspective prices are currently in wave c of second corrective pattern. Wave b (blue) formed a triangle as expected.

Normally corrective moves take more time than impulsive moves and as wave 3 has taken 21 days there is possibility that current wave 4 take more 7 trading sessions before starting next leg on upside.

Also it is interesting to observe that except for 1 middle bar in this entire correction all of the bars have formed alternate red and blue bars. Friday’s close was a red bar and so Monday can be a blue bar i.e. close above the previous day’s close.

In short, expect range bound movement to continue further as long as 5620 and 5720 levels are intact on either side.

For more information on daily research report visit www.wavesstrategy.com or mail across to helpdesk@wavesstrategy.com

MCX Copper: Elliott Wave count, Channels and RSI

MCX Copper: Elliott Wave count, Channels and RSI

The below article shows how we can combine basic technical analysis along with advanced techniques like Elliott wave theory. MCX Copper shows very clear wave counts and when combined with Channeling technique and RSI gives high probability trading setup.

MCX Copper 60 mins chart:

A few of the wave counts are deleted as it is meant for our paid subscribers of Commodity research report “The Commodity Waves Short term Update” by Waves Strategy "www.wavesstrategy.com"

We have mentioned in the previous report, “In short, as long as prices move below the resistance of 432 levels our bias is negative. Breach of previous day low of 429 will take prices lower till the next support of 426”. BANG ON

MCX Copper moved as expected. Prices continued the previous day move and moved lower till 424.65 levels, as expected.

Currently prices have arrived near the lower end of the blue channel and inched higher. On intraday basis prices might take support of this channel and it might move higher till ….

To know the missing text and wave counts subscribe to the daily publication “The Commodity Waves” by writing to helpdesk@wavesstrategy.com and get insight into Gold, Silver, Crude and Copper… Trade systematically and not randomly!!!

Nifty continues to move in sideways wave!

By Waves Strategy Advisors (www.wavesstrategy.com)

We mentioned on 11^th October 2012 update in "The Financial Waves report" for our paid subscribers, “Fresh shorts can be created below 5666 levels with 5750 as an important level on upside. However please remember as we are expecting a sideways action the trending moves can be short and prices can move in overlapping fashion. In short, wait either for 5666 to break on downside or 5750 on upside for short term direction on Nifty.”

In short, looking at different indicators and overall breadth of the market is looks that the top at 5815 should not be taken out for around 2 weeks. Next immediate support for Nifty is now at 5620 followed by 5530.

Nifty 60 mins chart (as published on 11^th October 2012):

Happened as of 22^nd October 2012:

Happened as of 22^nd October 2012: Nifty has so far moved between 5750 and 5620 levels. We clearly mentioned about 10 days back to expect a range bound activity for atleast 2 weeks and immediate support at 5620 and resistance at 5750.

Nifty action over past 10 days might be boring for many but for us it was interesting since Indian equity markets behaved exactly as expected and as per the Elliott wave structure we mentioned.

Subscribe to our daily research report “The Financial Waves Short term update” and find out what we expect next from here and trade in systematic way using crucial levels we mention in our research. To subscribe write to us at helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

COMEX Gold: Elliott wave count

Bottom line: COMEX Gold continued to fail near $1800. The short-term trend is negative.

The below excerpt is picked from  our 'Commodity Waves STU' of 18th October,2012. This report  is published everyday before market hours by Waves Strategy Advisors (www.wavesstrategy.com). To subscribe to this report write to helpdesk@wavesstrategy.com

Comex Gold Daily chart:

Wave Analysis:

In September 2008 Comex Gold has formed double top pattern near 1920 levels and fell steeply till 1525 levels. Prices have been failing to take out highs at 1800 levels over past many months.

Recently, in August 2012 prices have breached the small triangle pattern on upside, moved higher in the upward moving blue channel by forming higher tops and higher bottoms and for third time it has retested the resistance of 1800 levels. Once again prices found hurdle near the same level and drifted lower.

As per wave perspective, in front of us this corrective move has developed two alternate scenarios which are explained below:

Scenario 1: Prices have completed primary wave (A) on downside near 1525 levels in the month of January 2012 and is moving in primary wave (B) forming a triangle pattern. As long as prices fails to take out the resistance of 1800 level then it could move lower in the form of wave D till 1700-1690 levels and after wards prices could move on upside in the form of wave E of primary wave (B). Overall this will complete the primary wave (B) and once this wave is complete big leg down can start.

Scenario 2: After a decade bull run, the entire price action since August 2011 is a part of bigger triangle and prices are currently in wave E of this triangle pattern as shown in red alternate count. Once this wave E will complete the decade long bull run will resume and Gold will move well above $1900. This scenario will be preferred if 1800 mark is broken on upside decisively. This is a bullish scenario and indicates that prices should not break the support of 1670 levels on downside and eventually it should breach the resistance of 1800 level and it will give a rise of next trending move on the higher side.

In short, as long as prices move below the resistance of 1800 levels it could move lower near 1700-1690 which is recommended in both scenarios over short term. From medium term perspective, to start the next big trend it will be important for prices to break either the crucial level of 1670 or 1800 levels.

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

Reliance Industries: Elliott wave counts & Time cycle

To read the complete report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Reliance Industries is at very important juncture. It is important to see if prices are able to defend the low at 750. 

A break below this low will indicate that an important top is in place at 880 which will not be taken out for months to follow. Below chart shows Time Cycles and Elliott wave count on this stock along with crucial support and resistance levels. This excerpt is picked up from “The Financial Waves short term update” research report published daily. To see view on Nifty and other stocks – SBI &Ambuja Cement published along with Reliance in today’s morning report write to us at helpdesk@wavesstrategy.com

Reliance Industries Daily chart:

Reliance Industries 120 mins chart:

Waves Analysis:

Reliance Industries shows a very clear 5 waves up from the lows of 670 levels. Prices are either correcting this up move in a 3 wave structure or is starting the next leg down. For now it is difficult to say whether the current down move is just a correction of preceding up leg or next impulsive wave down. A move below 750 will confirm a bigger down leg has started.

Time cycles are suggesting that an important top might be in place near 880 levels but it is too soon to confirm that as of now. More price action is requiredto adopt this scenario.

However over shorter term, the trend remains down as prices have formed lower high and lower low structure and moving down in corrective channel. As long as 840 is intact on upside we expect this down move to continue towards the support of 790.

Nifty continues to move in wave 4...

Published in “The Financial Waves” by Waves Strategy - www.wavesstrategy.com on 17^th October 2012 morning before markets opened.

Bottom Line: Nifty continues to form alternate days red and blue candles as expected….

Nifty Daily chart:

 Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “In short, the bias on Nifty continues to be sideways to negative. As long as 5750 is protected on upside prices can move towards 5600 levels. For today expect the range bound movement to continue between 5620 – 5720.”

The current leg ongoing in Indian markets might be boring and time consuming. Such action is typical for wave 4 as we have been constantly saying all this while. We mentioned 5720 as important on upside and prices made a high of 5714 and turned down from there.

The channel shown on 60 mins chart remains intact and the high was made on the upper end of that channel. Prices are now approaching near the lower end of this channel and the support of 5620. As long as the lows at 5600 – 5620 is intact prices can continue to move within this narrow band.

The daily chart of Nifty clearly shows alternate days red and blue candles since past 7 trading sessions. If this structure continues Nifty can form a blue candle today which means close above the previous day’s close.

Midcap and Smallcap sectors are also not giving any trending move unlike previous structures when Nifty was consolidating but Midcap & Smallcap continued the uptrend.

In short, there is no change in our outlook and expect such boring sideways action to continue unless Nifty breaks above 5720 or below 5600 for short term trend in that direction. Once this wave 4 is complete wave 5 will start on upside that can take prices towards 5950 where cluster of resistances are present.

Infosys results: Stock continued to move by 7% to 10% on result day

Infosys results: Stock continued to move by 7% to 10%

By Waves Strategy Advisors (www.wavesstrategy.com)

Infosys result declared on 12^th October 2012: Shares of Infosys after plunging over 8 per cent during the day, shares of the company finally ended at Rs 2,395.65, down 5.36 per cent on the BSE. As per fundamental analysts Infosys continues to face challenges with regards to holding on to pricing and margins…

From technical perspective we applied basic channel techniques and Elliott wave counts to determine the path ahead of this stock. We were bearish on this stock well before the results were announced. The following excerpt is picked up from our daily research report published before the market opened on 9^th October… 

The bottom line we mentioned that, “In short, as long as prices move below the resistance of 2540 levels our bias is negative and prices could head lower till the next support of 2425 levels. Further, decisive move below this support will increase the selling pressure and prices could move lower till 2350 levels”

Infosys 120 mins chart: Published on 9^th October 2012:

Infosys movement after results announced (shown by circled area)

Waves Analysis:

We can observe above in 120 mins chart, in the last trading session prices sustained below the crucial resistance of 2565 levels and breached the upward moving blue channel on downside.

As per wave perspective, it seems that previous up move from 2100 till 2650 levels was in the form of wave a or 1 and prices are now correcting this impulsive up move.

In short, as long as prices move below the resistance of 2540 levels our bias is negative and prices could head lower till the next support of 2425 levels. Further, decisive move below this support will increase the selling pressure and prices could move lower till 2350 levels…. This is exactly what happened and stock closed at 2395 after making a low of 2310 after results were announced…

Subscribe to the daily research report “The Financial Waves Short term update” and see what charts tell us well before the news is announced. For more information write to us at helpdesk@wavesstrategy.com

Correlation between Nifty and USDINR!

Indian equity market – Nifty and currency – USDINR follow their own independent paths but at major turning points these market turns together infact there are times when these markets turn exactly on the same very hour of the day. The magnitude after the turn might vary but the correlations are very high at inflection points.

The below chart clearly shows how at each turning point both markets turned exactly on same day…

As shown above an upmove in equity market is associated with down move in Indian currency USDINR and vice-versa. Lately, on 5^th October 2012 Nifty turned down after making at high at 5815 and at same very hour USDINR turned higher after making a low of 51.50.

It is therefore important to see both the markets together that can give high conviction trades. Normally people use indicators like RSI, MACD, ROC to derive secondary confirmation but it is sometimes useful to think out of the box and use different asset class like Currency market to derive high conviction view on Equity….

To know what is next for Nifty and USDINR subscribe to the combine package of Equity and Currency report today and avail 50% off. Write to us on  helpdesk@wavesstrategy.com for more information or call on +91 9920422202 or visit www.wavesstrategy.com

DLF shares fall over land scam or price pattern indicated fall was imminent..

The following article is written by Waves Strategy Advisors Pvt. Ltd. that publish equity, commodity and currency research reports. For subscribing daily equity research report that shows Nifty movement and stocks which gives good opportunities you can visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

There has been news everywhere that the DLF shares have been falling on back of the fresh land scam

By anti corruption reformist Arvind Kejriwal.

Business Today mentioned that, “DLF shares on Wednesday fell over 4 per cent after ArvindKerijwal leveled fresh allegations about the company's nexus with Robert Vadra andHaryana state government”

If stocks moved after the news were announced everyone would act on news and would benefit from it. But if news would have been driving the prices than equity markets would not have rallied over past 2 weeks with so much of political uncertainty, inflation, slowing growth and negative news from global markets. We at Waves Strategy use Elliott wave theory and other technical tools to identify the price movement and forecast where it is headed. News or events produce only short term spikes and the major trend then resumes.

The below chart of DLF clearly shows that prices were at very strong resistance of 250 levels. This level was taken out only once in February 2012 which was also a flase breakout. We can clearly observe that prices have been constantly failing to move above 250 since July 2011 and has turned down towards 175 everytime it reached this strong resistance level.

This time as well prices have failed to take out 250 and started moving down strongly.

Our earnest advise to our readers is not to act on news but to stay ahead of the crowd and see price patterns and Elliott Wave to see where prices are headed from short to long term. Trading based on news is very subjective and not always logical.

For more information on various products that can help you take calculated and systematic trading decisions write to us on helpdesk@wavesstrategy.com

Daryl Guppy View synergies Elliott Wave!

The below article was published in today's morning report  of Waves Strategy Advisors before equity market opened. For subscription please contact on helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

Bottom Line:Nifty reacted lower from 5815 level which was very near to 5820 we have been mentioning…

Daryl Guppy Moving average method is very interesting to watch. This method uses a cluster of short term moving averages and cluster of long term moving averages.

Nifty: Daryl Guppy View and Elliott Wave Daily chart

Daryl Guppy Moving average method is very interesting to watch. This method uses a cluster of short term moving averages and cluster of long term moving averages.

Whenever all the short term moving averages move above each and every long term moving average one can initiate long position and whenever each and every short term moving average moves below all long term moving averages, a short can be initiated as it indicates reversal in trend.

Looking at the Nifty chart above requires little explanation and we can clearly see that how all short term moving averages moved above the long term moving average in June 2012. Nifty was at 5060 levels then and till date Blue color moving averages are sustainingabove the Red color moving average. The trend continues to be positive as per Daryl Guppy method.

Also please note that how long term moving averages cluster together after which major trend reversals happen.

Nifty Weekly chart:

Wave Analysis:

On Friday, NSE had a spike down of 10% due to erroneous trade by Emkay Global. This resulted in triggering of stop losses in few index stocks and futures. Prices recovered later but the participation was not present during the day due to confusion and high intraday volatility. We would be observing the movement on Monday to get more clarity on short term wave counts.

The above weekly chart shows that 5960 level is very crucial on upside. This is the level where the important resistance line from 2010 is intersecting with the 76.4% Fibonacci level of the entire down move from the highs of 2011. The short term channel is also intersecting at same point with the parallel line enclosing the top of February 2012 again coming at same level. There are cluster of resistances acting exactly at same point of 5960. It will be very important to observe how prices react from there. Please understand this does not mean shorts should be initiated around that level but one should be cautious on their long positions. Also as we have observed before, important resistance levels are usually taken out with Gap up moves. If we see a Gap up near 5960range that will open further strong positive outlook. But for now a move above 5820 will open possibility for 5960 over short term.

In short, it is important to observe how prices move today if prices can protect the low of 5706. A move below 5706 will indicate short term negativity and move above 5820 will resume the uptrend. The intermediate trend continues to be positive.

Nifty Trading Strategy...

Strategy for the day:  Due to sideways action our strategy remains unchanged. Existing longs can trail stops to 5665. 

Fresh longs can be created above 5735 with 5665 as stop loss and target of 5790. Shorts can be created below 5620 with day’s high as stop loss and target of 5525…

Bottom Line:The following excerpt is from “The Financial Trading Update” published on 4^thOctober morning before market opened by Waves Strategy Advisors. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Looking at the charts of Indian markets for past few days, it seems nothing has changed – Nifty continued to move sideways to positive and Midcap / Smallcap have continued to show their strong outperformance…

Nifty Daily chart:

Nifty 60 mins chart:

Wave Analysis:

We have mentioned in the previous update, “In short, as long as previous gap is unfilled on the downside and hold the support of 5665 levels our favored view is positive. Decisive move above the previous high of 5735 will continue the uptrend and it could head higher towards 5800/5820 levels.”

Nifty has continued to move higher with no sign of deterioration as seen from the daily chart. There is no loss of momentum and RSI has been taking support on 70 levels. During strong uptrend RSI can continue to move within the band of 65 and 80. This for us is not an indication of overbought state but a sign of strong up move. We previously saw such action from RSI in February 2012 which was along with spectacular rally in index. We have mentioned about ADXindicator and stated a strong trend can start few weeks back. This indicator also confirmed strong trending move was due which we have seen in month of September.

Lately, the bar size of Nifty has reduced and prices have been moving within a range of 30 to 50 points. Yesterday as well the True range of Nifty had been only 28 points. Even then prices have managed to stay above the prior day’s low on closing basis which is positive.

The Advance decline ratio and high beta sectors continue to show strong outperformance. There are no negative signs from these sectors and market remains in buy mode. 

Bollinger Bands on 60 mins, suggests that prices are currently in consolidation zone. A move below 5710 will indicate Nifty can continue to move sideways for few more days. Any move above 5750 will probably change the band of on upside and trending move shall resume.

In short, as long as the overall breadth remains good one can continue to focus on secondary stocks in high beta sectors. As long as 5660 is intact on downside the trend in Nifty remains positive…

To know the strategy for coming days and weeks on Indian markets write to us on helpdesk@wavesstrategy.com. Do not trade based on news or events but trade based on chart patterns and Elliott waves that helps you take objective decisions even before the news are announced.

Note: Levels mentioned in this report is as per Cash (Spot) market

Agri: The power of “Channels and RSI” in technical analysis...

The following is picked up from www.wavesstrategy.com... Contact information:  Email: helpdesk@wavesstrategy.com Follow us on Linkedin / Facebook / Twitter: Waves Strategy

Bottom line: We all observe channelized move in Equity, currency and MCX Commodities. But interestingly we have found channel move even in agri commodities. Below is the chart of Mustard seed (Rm Seed) which has been brilliantly moved within the channel in both the trend. Along with channel, momentum indicator RSI moved between the range of 30 and 70 which was acting as a support and resistance respectively.

Rm Seed Daily chart:

As shown above in daily chart of Rm Seed, from mid june 2012 prices had an excellent move from 3600 levels and moved higher in the blue channel by forming higher tops and higher bottoms and made a high of 4500. Thereafter prices consolidated sideways and in the mid of august 2012 it has formed top near 4530 and moved lower by taking support and resistance of the red channel.

We can observe above in daily chart, whenever prices has found resistance of the channel it has tested the RSI of 70 and exactly turned lower from the same level. Momentum indicator RSI is another simplest way of analysis which works accurately in the trending move.

In short, if you want to catch the trend in any of the direction then follow the two simplest ways of technical analysis i.e. parallel channel and RSI. This decreases the chance of whipsawing and increase the probability to run the trend.