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.