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