Applying Time Cycles on Reliance Industries

Applying Time Cycles on Reliance Industries

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“Cyclicality is a very important part of technical analysis”. Cycle theory gives a very different perspective to overall analysis and sometime becomes imperative to provide clarity on Elliott wave counts as well.

Cycles suggest that an important tops or bottoms are formed after a specific period in case of fixed cycles. For example: a stock following 60 days bottoming cycle will mean that a bottom is formed after every 60 days. Measuring bottoms using cycles are much more accurate compared to a topping cycle. However a few stocks do following topping cycle i.e. making a top after every specific period.

Below is an example of Reliance industries that shows 77 days alternating topping & bottoming cycle. This means that after every 77 days (+ 8 days) Reliance forms a top if it has formed a bottom the prior cycle period.

Reliance Industries Daily chart:

Below chart is from 26th September 2012 research report

Happened as on 01st November 2012

Cycle analysis:

We mentioned in Financial Waves short term report on 26th September 2012, “As shown in the daily chart, prices are following 77 days time cycle very well. After the completion of 77 days every time prices have either formed a top or bottom. At present prices have approached the time cycle and indicates the top formation near 885 levels. Since June 2012, 900 was acting as a strong resistance and prices reversed just below this level…. In short, failure to hold the support of 825 will take prices lower till the next support of 780 levels.”

Happened: Reliance made a low of 788 as on 1st November 2012.

Write to us on helpdesk@wavesstrategy.com or visit www.wavesstrategy.com to view the complete report that shows the combination of Elliott wave analysis, Indicators and Time cycles published in “The Financial Waves STU”