Nifty: Power of Failed Pattern!

Views on Nifty along with stocks are published on daily basis in morning before market opens in "The Financial Waves" short term update research report by Waves Strategy Advisors. To subscribe this daily research visit www.wavesstrategy.com or write to helpdesk@Wavesstrategy.comNifty showed sharp reversal yesterday and prices managed to close back within the wedge pattern!

Nifty daily chart:

Nifty 60 mins chart

Wave Analysis:

In previous update we mentioned that “The short term wave counts suggest that prices are in minor wave v of wave 3. However, a move above 5660 followed by 5680 will result into break of the channel on upside and will open positive alternatives. In short, any move below 5565 will resume the downtrend and prices can then move down towards 5470 levels whereas close above 5660 will be positive over short term.”

Nifty had a Gap up opening of almost 50 points on expiry day. Prices opened near 5645 levels and stayed between 5655 and 5630 for most part of the day. During second half as soon as 5655 level was broken on upside index quickly reached near 5700 levels.

The move above 5680 was sufficient to bring back prices within the wedge pattern as shown on daily chart. Prices are also almost on the verge of breaking the downward sloping corrective channel on upside. We adopted impulsive assumption as the wedge pattern was broken and there were chances of sharp selloff. A move back above the lower trendline of the pattern makes it false breakout. We are adopting corrective stand for current downfall since prices are able to move back within the wedge pattern and can result into sharp reaction on upside. Statistics show that a failed pattern carries higher chances of success in opposite direction than compared to valid pattern breakout. Also a failed pattern can result into violent moves in opposite direction i.e. on upside.

A move above 5750 followed by 5850 will confirm that the topping process is still ongoing and prices can then retest 6100 levels on upside before the downtrend begins. Whereas any move below the low of 5565 will resume the downtrend.

As shown on 60 mins chart prices have closed exactly on the downward sloping channel. More price action is required to confirm that the entire down move is complete and next leg on upside has started.A move above 5750 will further confirm this scenario.

The rally on last day of June series was limited to few heavy weights and there was hardly any participation from the broader market. The Advance decline ratio was also equally distributed. Many of the stocks that gave break on downside on Wednesday during final hour re-entered above the breakout area resulting into false breakout. Again this will be a failed pattern which can result into violent move on upside.

In short, it will be important to see how prices behave today. A strong Gap up opening which is sustained during second half will be strongly bullish and will open up possibilities for 6100 – 6200 levels on upside. Also this up move will be impulsive in nature which means it can be very fast and can surprise many. We are having the conviction of such strong moves on upside as we are aware of the Power of failed Patterns and the wonders they behold! 

To get more such insights on Nifty and stocks on daily basis subscribe to the equity research report "The Financial Waves STU". Visit www.wavesstrategy.com or write to helpdesk@Wavesstrategy.com for more information.

DJIA at Crucial juncture!!! Elliott wave counts

By Waves Strategy Advisors, for more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Equity market bellwether i.e. Dow jones industrial average (DJIA) has made life time high in the current year. DJIA is the index which has outperformed against emerging market index such as Indian Equity market which was failed to cross it previous high and moving lower from last 2 months.

DJIA has made life time high of 15521 in the month of May 2013. Since then prices have note breached the same level and moving sideways to downside. Prices are respecting our strong resistance zone which we have been mentioning in our Global report – The Global Waves since past many days.

Elliott wave theory, Fibonacci retracement and many other technical tools helped us to plot the crucial resistance level on DJIA.

DJIA Daily Chart: Medium term chart:

DJIA Daily Chart:

Wave Analysis:

On Wednesday, we had speech of Federal reserve chairman Ben Bernanke, he said that it will not pull back its $85bln a month bond buying programme just yet, but made clear that if America's unemployment rate continues to improve and inflation edges closer to 2%, then it will start tapering its monetary stimulus programme.  After this statement we have observed sharp movement on downside in DJIA and index closed on negative note. Technically, prices failed to persist within the upward sloping black channel, breached the immediate support of 15000 and arrived near the next support of 14700 and prices closed lower by more than 2%.

As seen in daily chart, in last two trading sessions we have observed fall of more than 500 points in US equity market. This indicates the end of wave …..of double zigzag pattern (a-b-c-x-a-b-c) and…... Prices had given respect to resistance zone of …… which we have been mentioning since past few weeks in the reports.

We can observe above in medium term chart, prices are moving higher since 2009 and it is in strong uptrend since past 3 years. Hence, to catch the top in secular uptrend we need more negative price confirmation which will be obtained below ……. levels. Unless that does not happen positional trader should refrain from creating short positions as of now.

In short,…………

DJIA is now approaching crucial resistance levels. Trading strategy has to be formed in accordance with the crucial level on upside. Do not miss the next turn in this index. Get access to International currency – EURUSD, Comex Gold and Comex Silver in the Global research report- The Global Waves The report will be mailed daily and you can get access online on the website as well under client login section. To know more get in touch with our product specialist NOW!!!

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Market outlook on Zee Business – By Ashish Kyal of Waves Strategy Advisors

Following is the English transcript of interview Mr. Ashish Kyal, Director of Waves Strategy Advisors (www.wavesstrategy.com) had with Zee Business on Markets @ 10 show.

Please note the below has been aired in morning between 10.00 and 10.30 am on 24^th June 2013.

1. What is the overall view on Indian equity market and Nifty?

A. Nifty is in a major downtrend. Indian equity markets are already underperforming world equity markets since start of 2013. This clearly indicates that we are very weak. Also prices have arrived near 5610 level which is extremely crucial. A break of 5610 and close below it can result into severe selloff for move towards 5200 levels. Given the oversold state of market bounce back towards 5700 will provide better opportunity with 5760 as stop on upside.

2. What is your view on Ranbaxy and the company has problems with Mohali plant?

A. Ranbaxy has been in a strong downtrend from the levels of 550. The stock is currently near 335 down on back of query on Mohali plant but a move below 330 can open further downside possibilities toward 270 levels over medium term.

3. What is your view on Punj Llyod?

A. Punj Llyod has strong downside momentum and is probably trading near life time lows. Buying should be completely avoided in this stock and any pullback should be used to create short position. 40 should act as strong resistance on upside.

4. Which stocks would you recommend to the traders?

A. DLF is one of the stock which belongs to very weak sector – Real Estate. We can already see weakness in many real estate stocks like HDIL, Unitech. DLF has broken very important support of 185 on downside and a move below 170 can take this stock towards 160 levels.

IDBI is next stock which I recommend sell as this stock belongs to midcap Banking space which is again very weak. Also this stock has failed to show any pullback and has broken important support of 80. So we recommend selling this stock on rallies to 75-76 with stop loss of 81 and move towards 67 levels.

5. Any stocks would you recommend as buying opportunity in current market for pullback?

A. Selective stocks with defensive sectors like FMCG and Healthcare can provide some buying options. Lupin within healthcare space has shown strong resilience to the current market weaknesses and is trading near life time highs. A move above 800 can take this stock towards 850 levels. Buying should be otherwise avoided in the current market since we are in a big downtrend.

RCom has shown outperformance against other ADAG pack stocks and market as a whole. If market favors then this stock can be bought on dips for a move towards 126 – 128 on upside near the previous high levels.

Please note: Ashish Kyal’s views or levels might change based on market movements. To get the latest views subscribe to "The Financial Waves STU". For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty: 140 points movement revisited and applying Bollinger Bands®

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com

Nifty had a fall of more than 150 points in single trading session.

On 31^st May 2013 we published on website the following article: “Nifty 140 points movement is here to stay!” Click on the link to refer to it again.

In the end we mentioned that “The predictably is going to increase as we expect a strong trending move to start in Indian equities. The sharp reversals over past few weeks looks to be ending and this time it will be a trending move in one direction and do not be surprised to see Nifty moving by 100 points as it is here to stay!”

Nifty had a down move of more than 150 points in single day. Increase in volatility and moves of more than 100 points provide important clues that the market dynamics have changed and such volatility is precursor to the bigger down trend! However it is imperative to observe short term important levels from trading perspective. Below excerpt from the daily research report“The Financial Waves” shows important levels using Bollinger Bands.

Nifty 60 mins chart: As of closing on 19^th June.

Wave Analysis:

As we have mentioned before, corrective moves are always challenging from trading perspective and markets are now digesting the sharp reversal seen on upside in last week. During such sideways market it is better to apply Bollinger Bands that provides important turning points.

As shown on 60 mins chart, prices touched upper end of the band near 5860 level and moved lower. The lower end of the band is now placed near 5770.

As per wave perspective, prices have ended wave y near 5680 levels and currently moving higher in the form of wave x of complex corrective pattern (w-x-y-x-z).  Once this will correction complete on upside then it will resume the downtrend. Hence, we are monitoring Indian equity market closely and using different technical tools to catch the important levels.

Bollinger Bands provided 2 important levels. Nifty opened at 5755 today – below the lower end of Bollinger Bands and the selloff continued throughout the day. This is one important study that we apply intermittently to derive crucial levels.

In short …..

The above chart shows how we have combined channels, Bollinger Bands, Elliott wave counts, Fibonacci levels, indicators. The actual report not only shows 60 mins chart but also shows daily chart of Nifty. Prices have closed today at very crucial level as per the daily chart and it is very important for any trader or investor to be aware of such crucial level which can result into strong moves if breached!

The cost for this daily equity research report is Rs. 2000 per month and the same can be subscribed directly from the Subscription section of the website www.wavesstrategy.com. You get access not only to Nifty but also to charts and objective reasoning for 3 different stocks. For more information write to us at helpdesk@wavesstrategy.com or call us on +91 22 28831358 / +91 9920422202

GBPINR: Power of Third wave!

GBPINR: Power of Third wave!

By Waves Strategy Advisors, For more information on subscription write to helpdesk@wavesstrategy.com

Since past one month we have seen a violent move on upside in four INR pairs. This means INRdepreciated not only against US Dollars but also against GBP, EUR AND JPY aggressively. GBPINR is one of the INR pair which has moved higher in last one month from 84 to 92.

Sharp move on upside from 84 has been captured by us very accurately which is shown below in Daily chart, picked up from the currency report – The Forex Waves which published on alternate day. This is possible by combination of Simple and advanced technical tool i.e. Elliott wave theory.  

Anticipated on 31^st May 2013:

GBPINR Daily Chart:

Wave Analysis:

We have mentioned on 31^st May 2013:

As expected, in the previous trading session prices opened on a positive note, continued the previous day up move and achieved the mentioned level of 85.70 levels. Prices closed above the crucial level of 84.70 after one moth sideways action between the range of 83.40-84.70 which indicates the resumption of uptrend.

As per wave theory, sharp move in the last trading session has confirmed that prices have ended minute wave (ii) near 83.40 levels and it has started the next leg on upside of minute wave (iii) of minor wave iii.

In short, earlier 84.70 acted as strong resistance and now it becomes crucial support over short term. As long as prices move above this support our bias is positive for GBPINR and prices can move higher towards the next resistance of 89.50/89.70 levels

Happened:

Wave Analysis:

Happened: GBPINR sustained above the crucial level of 84.70 and moved higher sharply. This is the power of Elliott wave theory. Prices have sustained above minute wave (ii) of wave iii and rallied sharply. Above move from 84 to 92 is the classical example of third of third wave which is very violent and unstoppable. Rise in INR pairs might be surprise to many but we have been very accurate in capturing the up move in all pairs.

Do not wait for news or any outcome, trade objectively. Get access to the research report “The Forex Waves” and also know the major trend for Nifty along with other stocks. For more information write to us at  helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

Applying Elliott wave – IDBI impulsive move!

IDBI chart clearly shows an impulsive move on downside. An impulsive wave has 5 wave structure and follow 3 important rules.

The benefit of trading with the Elliott Wave Principle is that it allows you to anticipate market action so that you are ready for the next move. Elliott Wave rules and guidelines let you know when your outlook is correct or when it's time to cut your losses.

IDBI Bank 120 minschart:

Wave Analysis:

The 3 basic rules that an impulse wave should follow are:

1.    Wave ii cannot retrace complete of wave i

2.    Wave iii cannot be the shortest wave of wave i, iii and v

3.    Wave iv cannot enter into territory of wave i

The above chart clearly shows each and every of the above rule being followed by IDBI. Also Elliott wave guidelines suggest that we should normally see positive divergence between wave iii and wave v that shows loss of momentum on downside. Also different waves are linked by Fibonacci ratios.

The above chart also shows different Fibonacci ratios being followed. Wave iii = wave i and wave v is approximately 61.8% of wave iii. Prices also broke the channel on upside as soon as these 5 waves got completed. After completion of impulsive waves prices should start moving in corrective fashion which is much more difficult from trading perspective. The different Fibonacci retracementsgive us indication on the how much price wise the correction can be expected.

The above analysis is of what has happened in past. We have published about the crucial levels for this stock and till where it can move in our daily equity research report “The Financial Waves”. For more information please write to us at helpdesk@wavesstrategy.com or call us on +91 9920422202 / +91 22 28831358 or visit www.wavesstrategy.com

Media: Ashish Kyal market outlook in The Economic Times section of Navbharat Times

English Transcript of the above article:

For Indian equity markets May and June so far have been tough months from both trading and investment perspective as Sensex has moved by more than 300 points in single day on almost 8 occasions.

We think Indian equity market is moving in a big range and since start of 2013 Sensex is moving between 20300 and 18100 levels. From medium term perspective, prices have to break above or below this range for a clear direction to emerge.

Over near term, Sensex showed a smart pullback on Friday and recovered by more than 350 points in single day. This indicates that we can see some positivity in this week. All eyes will be on RBI monetary policy announcement today which can trigger the short term direction. We do not expect repo rate cut since the complete impact of previous rate cuts is yet to be seen in the economy. Also the widening Current Account deficit and fall in Rupee will be a major factor to be considered that might prevent RBI from lowering policy rates.

Rupee has been one of the major concerns over past few months. INR depreciated not only against US Dollar but against major currency pairs like GBP, JPY, EURO. Since start of May Rupee against US Dollar has depreciated from 54 levels to near 59 seen on 11^th June 2013. Increase in Gold imports has been one of the factors responsible to increase the Current Account Deficit and in turn putting pressure on Rupee. Government has taken corrective measures last week by increasing the import duty on Gold from 6% to 8%. This should result into stabilization in Rupee and we can already see some appreciation in INR over past few days. Also the reform announcements and positive assurance from Finance Minister will lead to short term stability in equity and currency markets.

Defensive sectors like FMCG and Healthcare should outperform over near to medium term. One should avoid investing in smallcap and midcap sectors as they look vulnerable in current fall. The other sectors like Oil & Gas, Capital Goods, Technology are in months long consolidation and sectors like Metals, Realty, Power are in strong downtrend. From investment perspective during tough time defensive strategy should be adopted and so FMCG, Healthcare looks promising.

In this week we can expect some positive movement and Sensex can move towards 19500 to 19700 levels as prices have managed to close back above 200 days Moving Average. On downside 18900 should act as important support. Please remember we are living in challenging times and prudent risk management along with money management is the key to be a successful trader or investor!  

Indian currency crisis, Nifty major trend is down!

Bottom Line: It seems over past 1 week the movement of Nifty is dwarfed by the strong depreciation in INR.  

  INR pairs 

Currency worries:

The above charts are picked up from the currency research “The Forex Waves”. It needs little explanation and clearly shows the depreciation of INR in real sense. The sharp up moves in USDINR, GBPINR, EURINR and JPYINR clearly shows the vulnerability of Indian currency. This movement has happened despite of FII inflows, Dollar index weakening i.e. US Dollar falling against basket of currencies, Equity markets haven’t yet shown strong downtrend. If any of these parameters reverses then we have our doubts that even RBI intervention will be of much help. We are living in interesting times and the major trend for INR pairs has changed to upside. Short term consolidation or pull back is not ruled out. We have been on the right side of the trend as soon as USDINR broke above 54 levels few weeks back!

Nifty daily chart: 

Nifty 60 mins chart:

Wave Analysis:

In previous update we have mentioned, “In short, as long as prices move below 5850/5860 our favored view is negative and prices can move lower towards the immediate support of 5760/5750. Further, move below 5750 will accelerate the selling pressure.”

Nifty continued to move exactly as expected. Prices are failing to stay in positive territory and closed at 5760 levels. After a brief consolidation over last week the selloff has been very prominent in Midcap and Smallcap sectors.

It is normally observed that Equity markets lead the currency markets but this time it seems it is working the other way as shown in above currency charts. European markets are already showing strong reversal signs followed by Japanese and Chinese markets. It seems the world is now turning together but we will wait for more price confirmation to comment that the major top in world equity markets is in place.

As shown on daily and 60 mins chart, prices formed a classical Head & Shoulder distribution pattern and moved below the neckline. Bank Nifty was the first index to show this pattern and is leading the fall this time. Prices are currently moving in downward sloping red channel and the selling pressure looks to be accelerating. So far prices have taken out the previous up moves in faster time thus giving us early warning the trend has changed to downside.

Positional short positions can now use 5840 as stop loss on closing basis and ride the trend on downside. 5620 – 5640 is the level where we can have some supporting activity but we would refrain to come in path of strong downtrend and will observe how prices react from there. Any move below 5500 will be a strong confirmation that prices are headed towards 4700 levels!

In short, the trend continues to be negative for Indian markets as long as 5900 level is protected on upside.

To subscribe to this daily research report that gives view on Nifty and Elliott wave counts on 3 different stocks write to helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

Bank Nifty : Combining Head & Shoulder, Elliott wave and Momentum!

The below is published by Waves Strategy Advisors Pvt. Ltd. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Bank Nifty was one of the strongest index few weeks back. However there was a classical distribution and topping process near 13000 levels.

The below article shows how can we combine Elliott wave counts, patterns like Head & Shoulder, Channels, Fibonacci retracements etc.

Bank Nifty Daily chart: Anticipated on 5^th June 2013: 

Published on 5^th June: ….Recently after crossing its previous high of 13000 made on January 2013 it moved up and faced the resistance of the upper trendline and reversed. From past 2 weeks prices are moving lower by breaching its previous week low which opens negative possibilities.

As seen in daily chart, after forming Bearish Engulfing pattern on the top followed by the confirmation, prices then moved down accompanied by negative divergence on RSI (shown by blue line). We can also observe that prices have formed a topping H&S (Head & Shoulder) pattern and gave a bearish breakout on 31^st May 2013.

From wave perspective, after completing wave ………..(Please note weekly chart and bigger wave counts are purposely not shown in above chart)

In short, as far as 13000 is protected on upside our bias for Bank Nifty is negative and it can move down till 11800 levelswhich comes near 61.8% retracement of the prior wave…

Happened as of yesterday’s close:

Happened: Bank Nifty made a low of 11795 and finally closed the trading at 11820. It moved exactly as per Elliott wave counts, Head & Shoulder, Fibonacci techniques. This can be seen as highlighted above. Prices moved towards the target of 11800 mentioned on 5^th June. To know what is next subscribe daily research report “The Financial Waves” in which we cover Nifty along with 3 stocks on rotational basis.  

For more details visit www.wavesstrategy.com write to us on helpdesk@wavesstrategy.com or call us on +91 9920422202 / +91 22 28831358