July inflation accelerates to 5.79% ahead of expectations, What’s next for Banking stocks?

By Waves Strategy Advisors. For more information on daily research reports and view on Nifty along with other stocks visit www.wavesstrategy.com

Elliott wave on ICICI BANK: Applying Time Cycle, Price ROC and Trendline

Banking sector has been underperforming the broader market since 2 months. After steep fall, many banking stocks bounced back from the support levels. ICICI Bank is the victim in this seriousselloff and moved lower in last four weeks and currently moving near the crucial support level.

At this inflexion point, combination of advanced and simple technical tools help us to identify the next move in the stock. Below we have shown ICICI Bank weekly chart that shows the Time cycle which works brilliantly over medium term. In addition to Time Cycle, Momentum indicator Price ROC and trendline shows why ICICI Bank arrived near the crucial levels and what can be the trend form here on.  

ICICI Bank Weekly chart:

Elliott wave counts are purposely removed from above chart

Wave Analysis:

As seen above in weekly chart of ICICI bank, in the mid of June 2013 prices have breached the upward sloping blue channel and simple moving average of 200 weeks decisively. Thereafter, prices moved lower consecutive for four weeks, and tested the strong support of 860. Extendedtrendline has been working very well in this stock.  At present, prices are moving near the sametrendline and pause the downtrend. Earlier, for two times prices have found support of thetrendline and bounced back on upside.

Time cycle of 22 weeks works very well in this stock. It helps to catch the top after every 44 weeks (marked by red symbol) and bottom 22 weeks (marked by blue symbol). This means after every top formation this stock formed bottom two times in 44 weeks and bounced back on upside. At present, prices have approached the Time Cycle for second time and managed to protect the support of 860. These increase odds for the reversal in the coming trading sessions.

Inflation datamight produce only short term spike in interest sensitive sectors. But it seems Banking stocks are now near crucial support area. A positive close shrugging off the negative news is positive sign for us. But it is also important to see what will be short term important levels for timing the trades!

To know the medium term wave counts of the same stock, access to the equity research report –The Financial waves STU published on daily basis before market open. For more information visit http://wavesstrategy.com/index.php/services/170.html

Useful for: How to trade using Elliott wave and Time cycles

Related to: Elliott wave, Time Cycles, Price ROC, Channels