Infosys rallies over 7% post Q2 results but it was predictable using “Technical analysis”

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Infosys rallies over 7% post Q2 results; hits highest level since Jan 2011. 

Infosys Ltd rallied a little over 7 per cent in morning trade on Friday to touch its highest level since January 2011 of Rs 3,360, after the software exporter raised the lower-end of its fiscal 2014 dollar revenue growth guidance.

For many trading on Infosys might be a wild guess on result day as the stock has moved previously anywhere from -15% to +15% after the results were declared. But using technical analsysis and Elliott wave concept it is possible to determine the direction and targets for the stock.

In today’s morning report also we mentioned that

“We are expecting Infosys to give an upside move towards 3500 levels given the fact that it has managed to sustain above the 3000 strong resistance level which will now be a very important support. Infosys result day iseverytime eventful with more than 10% movement but this time we are expecting this stock to show relatively non euphoric movement and prices can move in a range of + 5% to 7%.” Infosys is currently up by 5% and touched 7% high levels exactly within the range.

We did not use any fundamental values to predict this but just stock price and our tool of Elliott wave analysis. Read below, we have published on 9^th October the below chart of Infosys along with upside targets and justification in our daily research “The Financial Waves Short term update”.

Infosys Weekly chart:

 Infosys Daily chart:

Wave Analysis:

The following was published on 9^th October morning report: As shown in weekly chart of Infosys, prices started uptrend from 1000 levels in start of 2009 and moved higher till 3500 in the end of 2010. After that stock started moving in the range of 3000 and 2050 since 2011. Recently, we have witnessed that the stock has managed to cross above 3000 level and is sustaining there. ………..looking at the wave perspective there is a possibility that we might see sucha move on upside.

As shown on the daily and 120 mins chart, after sharp move from 2150 to 3100 prices are moving in a sideways consolidation over past few days which seems to be wave iv. The current up move looks impulsive with 1 leg pending on upside.

Option strategy:From option trading perspective, many traders have been buying out of money calls and puts for this stock in anticipation for large moves on result day. However, looking at the option premium for both calls and puts we have our doubts how beneficial this strategy would be just in case results and forecasts come in lines with expectations that will drastically reduce the option value.

In short, our bias on Infosys is positive and we can expect a move towards 3400 in form of wave v.

All of the above was published 2 days back i.e. in morning research of 9^th October. This is a proof of why we say Technical analysis and Elliott wave theory makes market predictable and gives probable path.

To know our view on Nifty and why we have been bullish all the while when majority have been on opposite side subscribe to the daily research report “The Financial Waves short term update”  and you will have your answers. This can be the beginning for Indian market and do not miss the next big opportunity which looks highly probable. For subscription visit http://wavesstrategy.com/index.php/store.html or call us on +91 9920422202 or write to us at helpdesk@wavesstrategy.com