Nifty: An Exhaustion Gap TODAY? Next Trading Strategy!!!

Nifty: An Exhaustion Gap TODAY? Next Trading Strategy!!!

By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

An Exhaustion Gap is a gap that occurs after a sustained rally and is normally a 3^rd or 4^th Gap in anupmove. First confirmation that the Gap is of exhaustion nature and not run away Gap is obtained once the Gap is filled either on the same day or next day.

Post pattern implication of this pattern is that the next leg will probably start on downside oratleast sideways action is expected for few days.

A classical example of this exhaustion Gap can be seen on Nifty where prices opened today with almost 50 points Gap up and closed the Gap within first few hours of trading.

Nifty past history: WhenNifty was making a high near 6050 – 6100 in late January we warned our subscribers of a very important top is in place for months to come and not to get carried away in the euphoria. We projected 5550 to 5600 as our target area on downside. Nifty made a lowof5470 on 10^th April.

10^th April 2013:We published an intermediate report during market hours that stated - Nifty has managed to show good reversal from the bottom and has so far retraced the down leg in faster time. This indicates that the short term bottom is probably in place. Please have minimum positions on short side and if prices manage to close above 5600 then exit all your short positions.

Happened:Nifty has till date protected the lows of 5470made on 10^th April exactly as expected.

17^th April 2013: We used Fractal nature to predict the up move from 5600 and stated the following - It was on January 07, 2012 we predicted an up move towards 5650 from 4650 based on the setup, which happened and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output.

Happened: Nifty spot made a high of 5963 within the target zone of 5900 – 5970 we have been mentioning since past week.Nifty: An Exhaustion Gap TODAY? Next Trading Strategy!!!

An Exhaustion Gap is a gap that occurs after a sustained rally and is normally a 3^rd or 4^th Gap in an upmove. First confirmation that the Gap is of exhaustion nature and not run away Gap is obtained once the Gap is filled either on the same day or next day.

Post pattern implication of this pattern is that the next leg will probably start on downside oratleast sideways action is expected for few days.

A classical example of this exhaustion Gap can be seen on Nifty where prices opened today with almost 50 points Gap up and closed the Gap within first few hours of trading.

Nifty past history: WhenNifty was making a high near 6050 – 6100 in late January we warned our subscribers of a very important top is in place for months to come and not to get carried away in the euphoria. We projected 5550 to 5600 as our target area on downside. Nifty made a lowof5470 on 10^th April.

10^th April 2013:We published an intermediate report during market hours that stated - Nifty has managed to show good reversal from the bottom and has so far retraced the down leg in faster time. This indicates that the short term bottom is probably in place. Please have minimum positions on short side and if prices manage to close above 5600 then exit all your short positions.

Happened:Nifty has till date protected the lows of 5470made on 10^th April exactly as expected.

17^th April 2013: We used Fractal nature to predict the up move from 5600 and stated the following - It was on January 07, 2012 we predicted an up move towards 5650 from 4650 based on the setup, which happened and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output.

Happened: Nifty spot made a high of 5963 within the target zone of 5900 – 5970 we have been mentioning since past week.

Following chart was published today morning along with Nifty daily chart and Advance decline chart (not shown here)

Wave Analysis:

NSE Advance decline ratio (shown in today’s morning report)is providing some very interesting observation. There was a classical positive divergence when Nifty moved from 5650 to 5470 levels and Advance decline ratio did not make new lows. However, the up move from 5470 to current levels shows a strong negative divergence with Nifty where Nifty has crossed above its previous pivot level of 5750 whereas Advance decline ratio has been constantly failing to show any improvement. This further conforms to the outlook that the current up move is simply corrective and not start of strong uptrend.

From wave perspective, we think the current up move is wave a of ………….

In short, we continue to expect sideways action between the range of ……….. and 5950 levels over short term before the downside correction starts.

Nifty made a high of 5962 and reversed from there and made a low of 5868 from there which is almost a 95 points fall from the top so far…

To know what is next from here subscribe now to “The Financial Waves” and get insight not only in Nifty but also on Bank Nifty, Midcap indices and stocks that supports our view.

By Waves Strategy Advisors, For more information on daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty moved exactly as Fractal Nature & Elliott wave suggested!!!

Nifty moved exactly as Fractal Nature & Elliott wave suggested!!!

By Waves Strategy Advisors, For information on various research reports visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

We published an article on Nifty: Using Fractal nature to predict future price action on 17^th April 2013. 

Nifty was trading at 5680 then. We compared Nifty Fractal pattern to that of January 2012 rally and mentioned that if our Fractal analysis is correct prices can have similar post pattern implication and should move towards 5900 – 5950 levels. Nifty spot has made a high of 5909 as of now in just 5 trading days.

Recent sharp move on upside from 5545 level might be surprise for many market participants but our subscribers were aware of this pattern and prices have moved exactly like that. The below charts explains it all and requires little justification!

Nifty chart: picked from 27th February 2012

Nifty daily chart:

Anticipated on 17^th April 2013:

Happened as of today 25^th April 2013, 1:30 pm

We have mentioned in the report of 17^th April 2013, “Indian markets are constantly exhibiting good fractal nature. We are showing a chart picked up from the 27^th February 2012 report that showed a very similar setup that the current chart is showing. A wedge shaped formation was clearly seen near the end of fall of 2011 just before the rally and wave e of the wedge pattern was truncated ……………. and now we can expect an up move towards 5970 as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output”.

Happened:Nifty Fractal Nature worked precisely as expected. Prices made a high of 5909 as of now within the expected zone of 5900 – 5950!!!

Do not get carried away in euphoria and start creating long positions when we expect the move to be in matured up trend. You will start hearing strong positive news as soon as Nifty reaches 5950 levels exactly at the wrong time… The daily research report “The Financial Waves” gives objective reasons justified using technical analysis and Elliott wave analysis for future price action of Indian markets and stocks. See the magic of price patterns as it unfolds before you!!!  

To subscribe to daily research report "The Financial Waves" visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202

Relation between Infosys results, Satyam Scandal, Japan Tsunami !!!

Relation between Infosys results, Satyam Scandal, Japan Tsunami !!!

By Waves Strategy Advisors, For information on various research reports visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Infosys results were declared on 12^th April 2013. 

Infosys fourth quarter net profit rose 3 percent year-on-year  (1 percent quarter-on-quarter) to Rs 2,394 crore, helped by higher other income and lower income tax expenses. The stock had a gap down opening of nearly 15%. Nifty on that day was down by 80 points and 75 points was due to Infosys. Nifty made a low of 5494 on that day but failed to breach its previous low of 5477 which was made on 10^th April 2013. Markets managed to protect the lows and started rallying from very next day as shown in below chart!

Nifty daily chart: Last updated 17^th April 2013

Satyam Scandal - Nifty daily chart 2008 - 2009

Satyam Scandal: A very similar event occurred 4 years back when we came across the SatyamScandal. The Scandal came in early 2009 where IT major Satyam Computer Services’s explosive revelations send the market on a southward spiral. Satyam’s shares plunged 77.69% in a single trading session on 7 January 2009, as chairman Ramalinga Raju resigned after announcing during trading hours that the company’s accounts were inflated. The shocking revelation of the accounting fraud, estimated at about Rs 7000 crore, sent the BSE 30-share Sensex tumbling 7.25% on that day. Interestingly in this case, again Indian markets managed to protect its previous low of 2008 and later started the uptrend.

Nikkei 225 (Japan) daily chart 2008 - 2009

Japan experienced one of the worst Tsunami and earthquake in 2011. The equity index of Japan Nikkei 225 clearly shows reaction to the event. In this case as well event did create lows but later market immediately reversed and resumed the original direction protecting the lows created.

Case in point: We believe that event does not determine the direction of the market but can produce only short term spikes that can last from few minutes to hours to few days but the original trend eventually resumes. Also a common thing betweenInfosys andSatyam is that both the events resulted in down move but that managed to protect the immediately preceding pivot lows. In case of Japan, equity markets quickly recovered after the event and prices rallied back towards the level before the event and then resumed its original trend.

It is therefore important not to trade based on news or event as they will be opposite exactly at the wrong time. Even this time Infosys results turned most of the people bearish exactly when we expected an important short term lows in Indian markets.

Do not get carried away by news but apply Elliott wave patterns and technical studies that helps us to be objective and trade in correct direction of the trend. Our daily research reports on Equity, Commodity and Currency markets provides detailed technical charts and explanation that justifies our stand objectively!!!

By Waves Strategy Advisors, For information on various research reports visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty: Using Fractal Nature to predict the future price action!

Nifty: Using Fractal Nature to predict the future price action!

Following was published in today's morning report "The Financial Waves" by Waves Strategy Advisors. This research is published everyday morning before market opens. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

The “Fractal Nature” is an important concept which states that repeatable patterns occur on varied time scales and can be seen on 1 minute charts to Daily charts to Monthly charts. 

We have shown such Fractal nature in Indian markets from time and again. This simply confirms that everything in this world is symmetrical & patterned and there is no place for randomness to exist for extended period of time.

Below charts of Nifty shows a clear Fractal nature visible between the current chart and 2011 bottom pattern formation!

Nifty daily chart:

Nifty chart: picked from 27th February 2012

Wave Analysis:

The following was published in the morning research report “The Financial Waves”

We mentioned in previous update, “If market protects prior lows after an event and continues sideways action this shows the prior trend is about to reverse. A similar behavior was observed when 2008 lows was formed which was very well protected after the Satyamscandal was disclosed and the trend changed to upside in 2009. However, that was of very big primary degree compared to the current minor degree….A move above 5600 will open positive possibilities towards 5750 or higher…”

Indian markets are constantly exhibiting good fractal nature. We are showing a chart picked up from the 27^th February 2012 report that showed a very similar setup that the current chart is showing. A wedge shaped formation was clearly seen near the end of fall of 2011 just before the rally and wave e of the wedge pattern was truncated i.e. it ended above the end of wave c. Also the bigger fall was perfectly channelized. Similarly, the current fall has been within perfect channel along with wave e failing to move beyond the end of wave c. Both the charts show positive divergence and a sharp reversal on upside giving the breakout. It was on January 07, 2012 we predicted an up move towards 5650 from 4650 based on the setup, which happened and now we can expect an up move towards …………. as the setup is exactly identical but of lower degree. This is nothing but fractal nature and we will see if this results into a similar type of output.

Nifty finally managed to show a strong closing yesterday and 5600 was taken out quickly as soon as markets opened. The rally intensified further as soon as 5650 was broken on upside. Except IT all the sub indices closed positive.

Indian markets continue to move independent to the global equity markets and sharp drop in US and UK yesterday failed to show any impact. Also in entire 2013 markets have managed to rally on negative news whereas it has fallen on positive outcomes like repo rate cuts. Poor results byInfosys resulted in only a short term spike on major index and the rally started from the very next day.

Positional traders can now follow our trailing stop method and can now trail stops to ……….

In short, we continue to be bullish on Nifty as long as -------- is intact on downside for a move towards ------------!

Nifty started the upside correction of the fall from 6110 to 5470!!!

Following was published in today's morning report of "The Financial Waves" by Waves Strategy Advisors. This research is published everyday morning before market opens. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Bottom Line: Nifty continued to protect the recent lows and started consolidating as expected.

Nifty daily chart:

Nifty 60 mins chart:    

Wave Analysis:

We mentioned in previous update, “An interesting thing to observe on Friday is that Banking index managed to show strength throughout the day and also closed almost 1% up. …So the broader market is currently showing some resilience. In short, as long as 5475 is protected on downside and 5600 on upside we can expect short term sideways action between this range. A move below 5475 will take prices towards 5450 and a move above 5600 will start the upside correction!”

Nifty had a minor Gap down opening but filled the Gap during the first hour of trading and showed good strength throughout the day. Prices made a low of 5500 and a high of 5593 which was very well within the range of 5475 and 5600 as we expected. Despite poor performance by IT stocks like Infosys, TCS index has been managing to protect the previous week’s low very well. This further adds to the positivity.

If market protects prior lows after an event and continues sideways action this shows the prior trend is about to reverse. A similar behavior was observed when 2008 lows was formed which was very well protected after the Satyam scandal was disclosed and the trend changed to upside in 2009. However, that was of very big primary degree compared to the current minor degree.

Banking index continued to outperform currently and overall breadth was minor positive. However, prices have been failing to close above 5600 which indicates that our triangle assumption is correct as shown on 60 mins chart.

In short, expect sideways action for a day or 2 as long as 5600 on upside and 5500 on downside is protected. A move above 5600 will open positive possibilities towards 5750 or higher which will be an upside correction of the entire down move from 6100 to 5470.

Will Gold Glitter again!!! Is Gold still a safe haven???

Will Gold Glitter again!!! Is Gold still a safe haven???

By Waves Strategy Advisors, For more information on where is Gold & Silver headed from here visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Comex Gold showed one of the biggest one day decline on 12^th April 2013, since 2012.

Prices broke the very important level of $1540 on Friday and failed to produce any meaningful bounce back so far. Expectation was that this level of 1540 should hold but since a very clear decisive break has happened on downside Gold should lose its shine and will eventually lose its tag of “safe haven” or “safe investment”

Comex Gold Daily chart:

MCX Gold Continuous Daily chart:

Wave Analysis

Comex Gold fell to its lowest levels since July 2011 in the last week. Prices failed to hold the strong support of 1520 levels, fell steeply and made a week low of 1481 levels. Overnight, prices opened on a lower note and made a low of 1425. Sharp move below 1520 levels broke the contracting triangle pattern on downside and indicates the topped out in yellow metal. In short, ….…… will now act as a strong resistance on upside. As long as, prices move below this level our favored view is negative and prices can move lower towards……….

Similar to Comex Gold, MCX Gold had a violent move on downside in the previous trading session. Prices broke previous low of 29000 and closed near week low of 27600. Decisive break of downward sloping blue channel has resumed the downtrend.

As per wave perspective, failure to hold the pivot low of 29000 indicates the resumption of double zigzag pattern (a-b-c-x-a-b-c) in the form of minor wave c.

In short, ………… will act as a strong resistance. As long as prices hold this level our bias is negative. On intraday basis any attempt form the current level will provide …….. for a move towards……….

Don’t miss the next big opportunity in Yellow metal. Subscribe “The Commodity Waves” daily research report to see what is next for Bullions since multi-months support levels have been decisively broken and know the major trend going forward!!!

Make objective sense out of the near-term fluctuations in Gold, Silver, Copper and Crude. For more information write to us at helpdesk@wavesstrategy.com or call us on +91 9920422202 / + 91 22 288313588 or visit www.wavesstrategy.com

Infosys results – Down by more than 20%. What is driving the stock prices???

Infosys results – Down by more than 20%. What is driving the stock prices???

By Waves Strategy Advisors, For more information on daily research report visit

www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Infosys results declared on 12^th April 2013 :

Infosys fourth quarter net profit rose slightly higher-than-expected 3 percent year-on-year  (1 percent quarter-on-quarter) to Rs 2,394 crore, helped by higher other income and lower income tax expenses.

Results were positive but then too stock tanked 15% on opening and is currently down by more than 20% i.e. a fall of whole Rs. 600 on a single day. This is a disaster for a blue chip stock and it has been happening time and again. Infosys results are now known to produce a movement or anywhere between 10% to 20% on result day and then consolidate for months. This stock is having a weightage of approx 6.75% on index as of now & so it has contributed a fall of more than 40 points on Nifty. One may fall short to find objective fundamental reasons for such poor performance and trading will be challenging if you take action after the news announcement. However during such situation as well technical analysis can come handy to explain the major trend of this stock. Read further to know more:

The following excerpt is been picked from our research report “The Financial Waves” which was published on 11^th April 2013

Infosys 120 mins chart:

Infosys chart 120 mins as on 3.00 pm

 Wave Analysis:

Following was published a day before Infosys results were announced -

As seen in daily chart of Infosys, we can observe that prices are moving in a big range of 3000-2100 from past 2 years. This year prices faced the resistance of 3000 twice and fell steeply. Also we can see that prices made a double top formation and had given a fresh break on downside. To open further negative possibilities, it needs to move below 2730 which can accelerate selling pressure taking prices lower till 2550 levels.

As shown on 120 mins chart, prices after breaking the upward sloping blue channel prices thereby started moving in a sideways to negative direction.

From wave perspective, prices have ended minor wave v of intermediate wave B near 3000 levels and started the next leg on downside in the form of wave C

In short, as far as 3000 is protected on upside our bias for Infosys is negative. A move  below 2730 will take prices lower till 2550…

Infosys is currently (12^th April, 3:00 pm) quoting at 2310, down by 20% - 600 points!

Don’t follow the crowd, think objectively. Catch the trend before it is over. To know what is next for Nifty and 3 stocks that can give good trading opportunity visit www.wavesstrategy.com or write to us at helpdesk@wavesstrategy.com or call on +91 9920422202 / +91 22 28831358.