Sensex Time Cycles! Nifty expanding pattern...

Following was published in Financial Waves short term update report by Waves Strategy (www.wavesstrategy.com) on 16^th November 2012 morning report...

Sensex Daily chart: 

Wave Analysis:

We are re-visiting 69 days cycle on Sensex. This cycle has worked very precisely in the entire fall of 2011. Also it has given the exact day of low on 26^th July 2012. Assuming that this cycle is still working the cycle low date was 7^th November 2012. Giving + 8 days leeway we get a date maybe today or 19^th November for an important low to be formed. Failure to do that will increase the odds that this cycle has probably shifted to the low marked as wave ii. If prices manage to protect the lows at 18400 and move sideways from here it will confirm that 18400 should not be taken out atleast for few weeks.

As shown on Sensex, prices should rally in the form of wave v and a top should be formed around 19760 level by December end or first week of January 2013.

12 period and 34 period ROC is also providing important information. In the current period 34 period ROC has always turned from 0 line. Let us see if is repeated again!

Nifty Daily chart:

Nifty Expanding pattern (Alternate scenario):

We mentioned in previous update, “We are re-visiting 69 days cycle on Sensex. This cycle has worked very precisely in the entire fall of 2011. Also it has given the exact day of low on 26^th July 2012. Assuming that this cycle is still working the cycle low date was 7^th November 2012. Giving + 8 days leeway we get a date maybe today or 19^th November for an important low to be formed… A move above 5700 is important for positive confirmation that wave 5 has started. As long as this level is protected on upsides expect some sideways consolidation between 5600 and 5660. A move below 5600 can take prices towards 5580 level.”

Nifty had a minor gap up opening but prices failed to sustain near 5650 level and gave a steep fall on downside. Prices moved down after completing wave b near 5650 levels as expected and shown on 60 mins chart. However we expected fall to be restricted near 5600 – 5580 level but prices failed to take support near those levels and made a low of 5560. The movement was very fast and did not give much time for short term traders to take action.

We are now showing one more possibility of an expanding triangle pattern. This pattern has a typical property of breaking important support and resistance levels but only to reverse later. The above 60 mins chart clearly shows these characteristics. Prices are currently in wave d of wave (b) which can get completed near 5545 levels. However we will require a reversal at those levels before changing our short term bias to positive from negative. Expanding patterns do not give much respect for crucial levels and this can be observed in Friday’s market action as well.

In short, the bias is negative but indicators are extremely oversold and Time cycle bottom is near. However price confirmation is important and as long as 5650 is not taken out on upside we will remain cautiously negative. A move below 5350 will overlap wave 4 with wave 1 and will indicate that our assumption of current impulsive structure from low of 4800 is wrong. However, this looks a lower probable scenario as of now.

Next few days of price action is extremely important which will give more clues of ongoing wave structure. 

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