Nifty- Understanding double corrective Elliott wave pattern – Part I

The similar research is published in daily report "The Financial Waves" For more information  on subscription visit www.wavesstrategy.com

Elliott wave is one of the classical technical analysis tools that helps to predict the future market direction and forecast simply using prices and nothing else. 

We are the followers of Advanced Elliott wave concept and to read the waves properly we apply other techniques as well like Channels which as per advanced concept is mandatory and not optional.

The below chart gives a very clear example of double corrective pattern that started from the high of 6340 levels. Many Elliotticians find it difficult to understand complex corrections. But it is not that difficult. There are 3 standard corrections: Zigzag, Flat and Triangle. If markets would have formed only 1 of these 3 standard corrections life would have been very easy but who said making money in markets is not like starting your own business. There is always risk you have to take and gestation period which is in the form of seeing profits. Even a novice trader has to see the different cycles of market before he can finally develop his own techniques of trading that has success of more than 50% probability. And combine that with Emotions, Money management, Risk ability, news flow, data, etc.

Let’s get back to Double corrective patterns. As per this pattern 2 corrections are combined together with a corrective pattern in middle known as “x wave”. 1^st set of correction is combined with 2^nd set of correction with x wave joining them. So a double zigzag correction is a-b-c-X-a-b-c. A double combination correction involving zigzag and triangle is a-b-c-X-a-b-c-d-e.  Also the 1^stcorrection is for namesake called “W” and the 2^nd correction is called “Y”. so 1^st a-b-c is named W and 2^nd a-b-c-d-e which is triangle is named Y. Now have a look at below chart:

Nifty 60 mins chart:

On one lower degree, the internal structure of this correction is clearly visible on 60 mins chart. 2^nd corrective pattern within is forming as a triangle with lower trendline support near 6050 and upper resistance line at 6120. When triangle forms a part of complex corrective pattern it is known as non – limiting triangle since prices do have limitations to the upside movement like normal triangle has.

As shown on 60 mins chart, So crossing above 6110 – 6130 will be firmly positive which will break important short term resistance levels. Looking at short term wave counts, currency charts,PCR ratio, our expectation is of upside breakout….

The above was mentioned today morning research report “The Financial Waves short term update” before equity markets opened when prices were exactly at the channel resistance but the pattern was clearly looking completed by yesterday’s close. Today itself Nifty obliged by having a Gap up opening near 6120 and is now quoting at 6170.

So you can now clearly see how we identified pattern which helped in forecasting a breakout above 6120 levels. The complex corrective pattern is not that complex from understanding but it is just 2 corrections connected together and if you can understand this pattern it will help in making good forecasts yourself. There is more to the corrective patterns. Stay tuned and we will discuss that here in next part.

For seeing how we forecast markets using Elliott wave patterns and counts not only on Nifty but stocks as well you can subscribe to “The Financial Waves short term update” and see it yourself. Try it for a month and trust me if not anything you would have taken a step ahead in learning this wonderful technique of Elliott Waves!!!

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Stock tips for the day by Ashish Kyal on Zee Business!

Stock tips for the day by Ashish Kyal on Zee Business!

Nifty trading Strategy: Nifty has been moving within the range of 5970 and 6150. 

As long as this range is intact one can trade by buying near supports and selling near resistances. For today, long positions can be created if prices move above 6080 with 6030 as stoploss and target of 6140.

1. Voltas

Voltas had given Inverse H&S breakout around 85 levels. Yesterday it was up by more than 4% in choppy market. This is showing inherent strength in this stock. We are expecting that this stock has more potential left on upside. One can buy this stock on dips towards 96 with the stop loss of 93 and the target of 105.

2. JSW Steel

JSW Steel is one of the stock which is outperforming the broader market. Stock is forming higher highs and higher lows and trading above the 20 DMA which is positive sign for short term. One can buy JSW Steel on dips to 915 with 900 as stoploss and target of 940.

3. Tata Motors

Despite of market volatility Tata Motors has continued its outperformance. Currently Stock is trading at life time high level and we are expecting it will move higher in coming trading sessions. Yesterday Tata Motors was leading gainer in Nifty. This is aiding positivity in this stock. One can buy Tata Motors on dips to 394 with the stop loss of 385 and the target of 415.

4. Crompton Greaves

In recent trading session we have observed outperformance of Capital goods sector. CromptonGreaves is outperforming the Capital goods sector. One can buy Crompton on dips to 116 with the stop loss of 112 and the target of 125.

5. LIC Housing Finance

We have observed H&S pattern in LIC Housing Finance. This indicates negative sign for short term.  Currently prices are trading below the important moving averages. One can sell LICHousing Finance on rallies towards 206 with the stop loss of 211 and the target of 192.

The above stocks were mentioned in morning on Zee Business and our views might have changed based on market movement.

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Trading Gold using “Technical analysis”

The below research is by Waves Strategy Advisors. For various research products visit http://wavesstrategy.com/index.php/store.html

The below article highlights on how to trade Gold using basic “Technical analysis” and techniques like Channels. Bullions are one of the highly liquid commodities.

In 2009 Comex Gold was almost trading near 650 per ounce and it made life time of 1900 near mid August 2011. Price almost tripped in 3 year. This type of trend we witnessed first time since 1996. It is quite oblivious that how one can almost capture whole trending moves. The simple answer is technical analysis, Elliott wave counts and other technical tools.

Even basic techniques like channels also work precisely and give entry and exit points.

Comex Gold 120 mins chart:

After making top near $1900 we witnessed corrective movement in Gold. If events were to drive the prices of Gold than why is it following the simplest technique of channeling so precisely?

Prices are moving lower in downward sloping channel. The arrows show how precisely it has acted as support and resistance. One can easily conclude the short term trend looking at this chart.

But this does not mean that the current position on Comex Gold is a good bet to initiate shorts as prices have arrived near the lower trendline of the channel. So what should be trading strategy from here?

To know more about daily trading strategy on Bullions subscribe to “The Commmodity Waves” or“The Global Waves” and get daily charts with explanation on Bullions, Energy, Base Metals. For more information visit www.wavesstrategy.com

ICICI Bank: A big triangle pattern since 2008!

The below research is picked from "The Financial Waves" daily research report by Waves Strategy Advisors. For subscribing to this report  which has Nifty along with 3 different stocks visit http://wavesstrategy.com/index.php/store.html

ICICI Bank Weekly chart: 

            Wave Analysis:

In last trading session, we observed strong buying in Indian Equity Markets. Bank Nifty and PSU Bank were up by almost 3.5% each. ICICI Bank was up by more than 5%, which suggest upside momentum is building up in this stock.

As shown in weekly chart of ICICI Bank, from last 3 weeks prices are trading in the range of 1090 and 1000. Yesterday’s up move has brought prices near the upper resistance of the range. So, any move above 1090 is necessary to continue this up move, otherwise more sideways action is possible.

As marked on weekly chart, prices are moving higher in intermediate wave B and have already retraced more than 61.8% of the intermediate wave A. Hence, indicating that it is moving in flat correction pattern. As per this wave counts one leg should come on downside in the form of intermediate wave C. However, this scenario remains valid as long as 1250 is intact on upside. Any move above 1250 will indicate that triangle pattern which is since 2008 completed at 750 in the form of wave E and moving higher in form new wave structure. But, as of now we have not got any confirmation, so above mentioned counts remains valid.

As per time perspective, yesterdays up move has retraced prior down move from 1090 to 1010 in faster time. If, today we see closing above 1090 then it will provide confirmation from time as well as from price perspective.

In short, as long as ..............is intact positive possibilities are open. Any move above........

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Punjab National Bank: Applying Elliott wave, channeling technique and RSI!

The below research is by Waves Strategy Advisors. For more information visit www.wavesstrategy.com

Since start of November, 2013 we have witnessed lot of volatility in Indian markets.

The up move was mainly led by specific sectors participation. During this kind of market, it becomes necessary to do the sector specific analysis, so that one can trade better.

We observed one of the good up move in Punjab national bank from mid to start of October, 2013. Many participants were expecting higher levels as market was on verge of taking out 2008 high. However, Elliott wave counts, channeling technique and RSI suggested that prices are in matured stage of up move and downside is possible. Hence, we published PNB Research in “The Financial Waves STU” dated 6^th November, 2013.

The below is the anticipated and happened move on PNB:

PNB 120 minschart:Anticipated on 6^th November, 2013 when prices were trading at 600 levels

PNB Bank 120 minschart: Happened on 12^th November, 2013

The part of Research which we published on 20th November 2013:

We have mentioned in the previous update of 6^th November 2013, “Considering channel resistance on daily and 120 mins chart, 38.2% retracement level and momentum indicatorRSI we expect that wave (c) is in mature stage and very soon it can turn on downside. Negative confirmation will be obtained below 565 levels. Any move below 565 will take prices lower towards 520/510 level.” Bang on!!

PNB moved in lines with our expectation and achieved our both mentioned target on 13^thNovember. Later on prices bounced back from the channel support and moving higher.

As shown in daily chart, September month was trend changer for many of the stocks. In the month of September 2013, prices have bounced back from lower end of the red channel and formed higher highs and higher lows pattern.

As per wave perspective, the ongoing channelized move suggests that stock is moving in the form of double zigzag correction….

As shown in 120 mins chart, from the start of 2013 till end of August 2013 prices traded below 100 days simple moving average and showed underperformance. However,…

In today morning trade, PSU Bank Index was up by almost 2.5%, on other side PNB is consolidating above the channel, so will it resume upside again or downside is possible? To get the answer, subscribe to the The Financial wave STU in which we publish Daily Nifty research and 3 stocks with short term trading opportunity. For subscription visit the following link:http://www.wavesstrategy.com/index.php/store.html or Contact Us

Applying Bollinger Bands® on Nifty for crucial levels!

The below article is picked up from the daily research report 'The Financial Waves short term update" by Waves Strategy Advisors. For more information visit http://www.wavesstrategy.com/

The strong 3 days of up move is almost retraced completely today. Such sharp reversals can result into sideways action and Bollinger Bands provide very important support and resistance levels during such period.

The below chart clearly shows how we have been applying Channels and Bollinger Bands together in addition to Elliott wave principle (shown in actual research report along with 60 minschart)

Nifty daily chart:

Wave Analysis:

The below was published today morning in “The Financial Waves short term update” a daily publication sent directly on your email before market opens.

In previous update we mentioned that, “In short, amidst the contrary signals and indications it is better to wait for either 6200 to break on upside or 6050 followed by 5970 to break on downside for clear trend to emerge.”

Nifty had another Gap down opening and prices quickly moved towards the first support level of 6050 – 6040. The selling accelerated once this support zone was broken and prices made a low of 5985 and closed near day’s low. The selling pressure was seen across the sectors and the overall breadth of the market deteriorated.

On short term charts, RSI indicator has now reached the oversold zone below 30. This can result into sideways action or minor bounce back. Also previous close observation of price movement shows that Nifty has a tendency to break the important lows but just to move down towards immediate minor support and bounce back from there. This formation we term as an “h” pattern.

Bollinger Bands: The lower end of the daily Bollinger Bands is also near 5910 levels. We are expecting sideways action and so applying Bollinger Bands to get the judgment of important support. If, however, the strong downtrend starts this technique will not work.

In short, given the oversold condition on indicators minor bounce cannot be ruled out from here but any break below 5970 will open up possibility for …….. On upside 6050 will act as an important resistance which was previously acting as good support (polarity reversal). These levels were mentioned in the morning before markets opened

Happened today: Today’s high on Nifty is 6049.60 and low of 5972.80. We cannot be more accurate than this!!!

To get such important levels on daily basis even for stocks along with Nifty subscribe to the “The Financial Waves short term update” research report. Simply visit the Pricing page and select this research report. We will start your subscription instantly. For any more information write to us at helpdesk@Wavesstrategy.com or call us at +91 22 28831358 / +91 9920422202. 

Stock ideas for today by Ashish Kyal on Zee Business!

Below are the 5 stocks strategies / ideas given by me on Zee Business before the equity markets opened

1. Dabur 

Dabur has fallen all the way from 180 to 155 levels within 15 days. Currently prices are trading below all the important moving average.  This is showing weakness in this stock.  One can sellDabur on rallies to 161 with the stop loss of 165 and the target of 150.

2. Bajaj Auto

Yesterday we have observed sell off in Nifty in last 15 minutes and Bajaj Auto was one of the major underperformer. It has given classical H&S breakout in recent trading sessions and we are expecting that stock has more potential left on downside. One can sell Bajaj Auto on rallies to 1985 with the stop loss of 2020 and the target of 1930.

3. Ambuja Cement

Ambuja Cement is one of the stocks which have underperformed market in recent upside rally. Prices have reversed twice after kissing 20 SMA. One can sell Ambuja on rallies to 179 with the stop loss of 183 and the target of 170.

4. NTPC

We have observed consolidation breakout on upside in NTPC. In recent trading prices have taken support near 150 levels and bounced back. One can buy NTPC on dips to 151 with the stop loss of 148 and the target of 160.

5. Auro Pharma

Auro Pharma has shown very strong move from 210 levels and currently it is outperforming the market. Also pharma sector is a better pick during unclear market scenario. One can buy this stock at current levels with 265 as stoploss and target of 290.

The above stocks were mentioned in morning on Zee Business and our views might have changed based on market movement. We also publish daily Equity Research Report which covers Nifty plus 3 stocks along with detailed chart and explanation. By subscribing to intraday advisory you can get this research absolutely FREE. To get a copy of the same write to us at  helpdesk@wavesstrategy.com or call us on +91 9920422202 /+91 22 8831358

Sensex: Extremely crucial week close to confirming next BULL TREND BUT...

The below research report was published on 18th November morning before equity markets open. To subscribe to the daily research report  "The Financial Waves STU" visit http://wavesstrategy.com/index.php/store.html

Bottom Line: Sensex Long term charts along with Nifty still keeps both the possibilities open. This week’s action will be very crucial.

Sensex Monthly chart:

 Nifty daily chart:

          

Nifty daily chart: Bullish alternative

Nifty 10 mins chart:

Wave Analysis:

In previous update we mentioned that, “Existing short positions should now trail their stop towards 6060 levels and preferably on closing basis. Fresh shorts should be initiated only with caution since downtrend is already in its 7^th day and move above 6060 can result into deeper retracement on upside.”

We are showing Sensex / Nifty 5 different charts with 2 plausible scenarios on long term basis.  The following gives a detailed explanation right from long term to short term counts.

Sensex long term chart: Sensex monthly chart shows the long term counts since 2008 onwards. As mentioned earlier, the complete correction since 2008 is either a triangle pattern or a complex correction in W-X-Y-X-Z formation. Previously we mentioned 21100 level as crucial for Sensex on upside but the shorter term charts, negative divergence, slower momentum, reduction in speed of up move all warned us that even if Sensex touched life time high it is not sustainable and the market obliged us by giving a fall of more than 1200 points. Now after reversal seen on Friday the possibility is still open for both of the scenarios.

Nifty daily chart 1^st possibility: The 1^st daily chart shows one of the possibilities for Nifty forming a complex correction. To make this in sync with long term counts it seems wave [X] got over at the high of 6110 and since then wave [Z] is ongoing. The 1^st set of correction got over at the low of 5118 and after that a smaller degree (x) wave on upside got completed at the recent high of 6332. The current leg on downside is probable start of 2^nd set of correction of wave [Z]. As per this scenario the correction that started in 2008 is still ongoing and has few more months to run before the next bull trend starts.

Nifty alternative bullish possibility: The 2^nd daily chart shows bullish possibility where the entire correction since 2008 onwards formed a triangle pattern and got completed near the lows of 5118. Post that the upside move was impulsive wave i and wave ii is probably forming an Irregular Flat correction with c failure as wave b was close to 161.8% of wave a. Once this wave ii gets completed next leg on upside in the form of wave iii should start. This wave iii should be very fast, strong, having lot of momentum and strength to take out the highs and enter into unchartered territory very quickly. If this is the correct scenario the movement can be violent and everyone will keep guessing and evaluating the reason for such a move. This week’s price action is extremely crucial if prices are indeed starting the 3^rd leg on upside.

The reason why we are showing this alternative scenario now is that the move down from the high of 6340 to current levels even if covered more than 350 points we did not see a single fall more than 100 points and on Friday the up leg easily registered 100 points on upside although on intraday basis.

Short term possibilities: As shown on 60 mins and 10 mins chart, the move down can be considered either corrective or impulsive. A move above 6100 will indicate that the impulsive move on downside is over and we are headed for deeper retracement towards 6200 – 6250 on upside whereas if the Gap area is filled and prices move back below 6000 it will increase the odds that one leg on downside towards 5920 is pending before the upside retracement can start. On other hand if the Gap up action with broader market continues this will be a strong positive sign.

To explain the above technical view in a nutshell, any move above 6300 with strong momentum, breadth, Gapping action, participation from broader markets will indicate breakout from multi-year correction on upside whereas increase in momentum on downside and break of 5700 will increase the odds that the correction since 2008 has still few more months to continue before next Bull trend starts.

Over short term, close of Gap created on Friday will be bearish and move below 5980 will extend the correction towards 5930 or 5820 whereas any move back above 6100 will create higher highs and higher lows and will result into deeper retracement at least towards 6200 – 6250 levels. Traders following our trailing stop method should exit the shorts and locking a profit of nearly 200 points on Nifty and reinitiate shorts only below the previous low near 5970-5980 levels. Any continued Gap up action which remains unfilled throughout the day with broader participation will be positive.

The above research was published on 18th November 2013. To see the latest price action and changes made to the above counts & For daily research report with Nifty and 3 stocks visit http://wavesstrategy.com/index.php/store.html or contact us at helpdesk@Wavesstrategy.com or call us on +91 9920422202

Ashish Kyal - Participation of broader market will determine the trend ahead in Economic Times of NBT

Ashish Kyal - Participation of broader market will determine the trend ahead in Economic Times of NBT Written by Ashish Kyal    Monday, 18 November 2013 12:17 Sensex long term analysis:  Sensex has been moving in a big triangle consolidation pattern since 2008 onwards. The top made in January 2008 near 21200 was recently taken out in the month of November on the day ofDiwali Muharat trading & Sensex registered a high near 21320 levels. After touching life time highs we can see a fall of more than 1100 points. But on last Thursday again there was sharp rise and it seems the index is ready to touch the life time high levels again. Both September and October months have shown positive closes and has also taken out the previous month’s high. This keeps the monthly bias positive and November monthly close above 21300 will be the confirmation of the start of new Bull trend.  However, it will be important to see if the overall momentum increases with violent moves on upside and participation from the overall broader market which is important for confirmation of the next Bull trend scenario. Over here itself we have mentioned few weeks back about Sensex touching new highs and it did exactly as expected. Upside momentum and increase in volumes will be very important during this period. Economic cycle analysis:Interest rate cycle clearly shows that major bottoms in markets are formed during the period of reducing interest rates and the major tops are formed when interest rates are at highs. From Economic cycle perspective this also makes sense. In a normal inflationary environment it is the Bond market that tops out prior to Equity and later followed by Commodities i.e. Bond – Equities – Commodities. Also logically once the economy starts to heat up central bank starts increasing the interest rates to cool down the economy. This results in Bond topping out earlier than Equity market. This topping cycle was clearly visible during the 2006 - 2008 topping process as well. From Indian context, we think the interest rate cycle has already topped out in 2012 when we had interest rates near 8.5%. Since then we can see that interest rates have slowly come down but only it to be increased by 50 bps over past 2 months. However the current repo rate currently stands at 7.75% which is well below 8.5% top created in 2012. The interest rate cycle should now continue its downtrend and eventually Equity should start moving up. So from Economic cycle perspective Equity markets are due for an uptrend. Stock Selection:From stock selection perspective the stocks that can outperform during the next uptrend can be Reliance Industries, SBI, L&T, Tatamotors to name a few. Reliance Industrieshas been in a consolidation since 2008 till date and move above 930 will be first positive confirmation for this stock. Similarly for SBI move above 1900 will be an important positive confirmation. Tatamotors is already near life time highs and is outperforming broader market. This stock can continue to outperform for months to come. Week ahead: In short, given the strong reversal on Friday this week looks to be positive. On downside 20100 is very important support over short term and 19300 is crucial level from medium term perspective. Move above Thursday’s high of 20600 will continue the positivity and further above 21000 can result into life time highs again! For daily research reports and intraday / positional advisory along with long term forecast visit www.wavesstrategy.com