Nifty Elliott wave, Time cycles, Fibonacci

“Wishing you all a very Happy New Year 2014”

The below research is picked up from "The Financial Waves Short term update" by Waves Strategy Advisors. For subscription to daily research report delivered to your mailbox visit http://wavesstrategy.com/index.php/store.html

Bottom Line: Nifty volumes have been constantly falling with each up tick. Break below 6250 to provide first minor negative confirmation.

Nifty daily chart:

            Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that “The 74 period Time cycle is due today and it will be important to observe if a turn can happen today or by tomorrow.In short, move above Friday’s high of 6325 can continue the up move towards 6350 or possibly 6400. But we would advise to adopt a cautious approach and break below 6250 followed by 6200 can open up possibility for 6100.”

Nifty had a Gap up opening of around 25 points and prices quickly touched 6345 levels. It came close to the level of 6350 mentioned before. This level was also exactly 76.4% retracement of the previous down leg. Prices turned down in the very 1^st hour and traded negative throughout the day. The fall was exactly in lines with the Time cycle which was due today. So far Nifty has behaved as expected.

Yesterday’s fall has still haven’t breached the important level of 6250 so we do not rule out sideways consolidation between 6250 and 6350. Even if the supporting indicators are sending cautious sign it is imperative to wait for minor negative confirmation which will be obtained only on close below 6250 level.

As shown on 60 mins chart, we continue to show both the labels but failure to retrace the prior leg faster has increased the odds that the current up move is simply wave (b) and wave (c) on downside should start. This wave (c) can travel towards 6100 and break below it will open 5970 levels. We will keep this scenario as alternative as long as 6250 is not broken. On other hand, any move above 6350 will result into an upward thrust towards 6400 but the momentum has been drying out which can be clearly seen on daily Volumes chart.

Nifty daily chart, clearly shows that volumes have been reducing with each up tick and this time expiry also had very subdued volumes below 14 days average. The spike seen few days back is due to Power Grid FPO and can be disregarded. The entire up move has been with lower volumes and this I will not regard to year end closing since developed markets have still managed to move higher in unchartered territories.

In short, as long as 6250 on downside and 6350 on upside is intact sideways action is possible and close below 6250 will be first negative confirmation. However, any move above 6350 will extend the current up leg which can continue to be boring and slow. Hope 2014 will have good and more lasting trending moves after 1^st few days!!!

The above research is picked up from "The Financial Waves Short term update" by Waves Strategy Advisors. For subscription to daily research report delivered to your mailbox visit http://wavesstrategy.com/index.php/store.html which has Nifty and 3 different stocks with complete Elliott wave counts and explanation.

Gold, Currency, Bank Nifty view by Ashish Kyal in Economic Times Section of Navbharat Times

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Indian currency worse performing among BRIC nations

Wishing you all a very Happy New Year 2014!

The below is the English transcript of article by Ashish Kyal, CMT Director of Waves Strategy Advisors in Economic Times section of Navbharat Times.

Rupee outlook: Indian Currency is one of the worst performing as it is trading way beyond the top of 2009 made near 51.50 levels. Many of the other Asian currencies still have managed to protect the highs of 2009 where as USDINR made life time high near 69 in August 2013.

If we see from the bottom of 2008, then Indian currency has depreciated almost 58% from the lows of 39 to current levels. Brazilian Real has depreciated 34% from the lows of 1.55, RussianRouble depreciated by almost 30% from the lows of the 23 made in 2008.

Our outlook on currency is that Indian rupee can continue to deprecate and move towards 65 – 66 levels over next few months with 59 as very important level on downside.

Outlook on Gold: Introduction of Philadelphia Gold/Silver Index:It is the index which is made up of 16 mining companies worldwide that are into the business of mining of Gold and Silver. When this index moves higher, it shows that these companies are doing well and generating profits. However since 2010 onwards the index showed strong down performance and has now reached near the levels of 2009. As Equity indices lead Commodity prices we can conclude that the prices of Gold and Silver should continue to move lower atleast over next few months before we can see any meaningful bounce back.

Over short term, Indian Gold has an important support of 28200 and strong resistance of 28800 levels. Range bound movement can be expected in this week and break below 28000 will continue the downtrend.

Bank Nifty direction: Bank Nifty made a very important high at 12200 on 9^th December 2013. On18^th December RBI announced no hike in repo rates and Bank Nifty made a high of 11570 on same day. An interesting thing is that even after 6 trading sessions after RBI announcement of no rate hike Bank Nifty has failed to move above the highs made on that day and is still trading at 11460 levels as of Friday’s close. This is indicating inherent weakness in this sector. One should avoid going long on Banking sector this week as long as 12000 level is intact on upside.

Sensex past week: In last week Sensex moved up exactly as expected. However the movement was very less in Indian markets. Sensex moved between 21000 and 21235 levels. This is a movement of only 235 points in entire week. Many would argue for the vacation effect on Indian markets but during this same period we have seen strong uptrend has continued in developed equity markets with DJIA hitting life time highs, Nikkei hitting 6 year high. So Indian markets are relatively underperforming and looks to be on a vacation mode.

Current outlook: This week Sensex can have a consolidation between 20900 and 21400 levels. Since the low of 20600 we are seeing sectors or stocks contributing to the up move are changing daily. This is reflecting a day trading environment right now rather than positional trading. One should accordingly trade and avoid positional trading till clear trend emerges confirmation of which will be obtained only above 21500 with strong momentum! 

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Trading HDFC using Head & Shoulder pattern & Time cycles

The below research is by Waves Strategy Advisors. For more information on Trading using Elliott wave and Advanced technical analysis visit www.wavesstrategy.com. For subscription details visit http://wavesstrategy.com/index.php/store.html

HDFC has formed a very important Head and Shoulder pattern.

Head & Shoulder is a topping pattern and indicates reversal of trend. Break below neckline provides important confirmation on validity of this pattern. Also break of trendline with Time cycle suggests provide high conviction trade setups.

The below chart is published in today’s morning research report “The Financial Waves Short term update” along with short term charts. It is important to see the short term charts as well for getting good risk – rewards and entry levels. In below article we are showing only daily chart and not 60 mins chart.

HDFC Daily chart:

Waves Analysis:

HDFC is one of the stocks from finance sector which is underperforming Nifty since mid April 2013 and currently trading and sustaining below upward moving channel which was intact since 2009.

As shown in daily chart, recently prices made Head and shoulder pattern near upward moving channel and has given breakdown from the neckline and moving lower. Now, …… will act as a strong resistance.

We have been using other technique like time cycle to confirm the same. Time cycle of ….. days is working very well where this stock has made …... Now, prices have approached near the cycle andtrendline breakdown along with H&S Pattern.  As shown in 120 mins chart, it has been moving lower in downward moving channel. As long as this channel is intact trend can continue on ???

To get the indepth view of HDFC and how we are reading Time Cycle with short term charts on Nifty and stocks from other sectors subscribe by visiting http://wavesstrategy.com/index.php/store.html

Nifty applying multiple Time Cycles over short term

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Nifty has been moving in a trend that lasts for approximately 3 to 5 days on upside and around 5 to 8 days on downside. This has been valid for more than a year now. Also every time a new high is touched we can see apparent nervousness in market and a series of red bars.

To understand important turning points in addition to Elliott waves we also apply Time cycles. This time we are showing short term cycles applied on 60 mins chart.

The below excerpt is picked up from “The Financial Waves short term update” published on 23^rd December 2013 that clearly shows the important turning points as per 2 different cycles:

Nifty 60 mins chart: Multiple Time cycle concept (as of 20^th Dec closing 2013)

Wave Analysis:

Nifty had a flat opening but prices managed to stay in green zone during opening hours and buying pressure started to emerge post 11 am. As shown on the daily chart, Nifty very well protected the channel support we have been showing over past few days. It also respected the zone of 6110 – 6130 so far. Looking at the strong move of Friday there is a possibility that wave ……. ended near ……. levels. However, we are not too optimistic about the current up move as this can be corrective in nature making it a difficult trading environment this week.

Multiple Time cycle concepts on smaller degree: We are showing 2 different time cycles on 60mins chart that seems to be working well so far. Red is a ……hourly cycle and the blue is …… hourly cycle. The red cycle looks to be catching important bottoms and at few times important tops whereas blue cycle is alternately forming tops and bottoms. The turning signal as per these cycle is now near ………… Time cycles help us to time the wave counts when prices are in complex corrections.

In addition to this we have clearly explained the levels and possibilities that are important to observe for price confirmation. Also the move tires out everytime it goes near new highs. Will it happen even this time?

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Ashish Kyal view on Sensex in Economic Times section of Navbharat Times

Sensex is lacking momentum even after touching new highs!

The below is the English transcript of article by Ashish Kyal, CMT Director of Waves Strategy Advisors in Economic Times section of Navbharat Times.

Sensex and Nifty both made new life time highs in current month of December. Both the indices crossed above the life time high levels of 2008. But crossing a level should not be the sole reason for believing the uptrend but it has to be supported by Volumes and strong momentum.

Sensex touched new life time highs on 09^th December 2013 at 21484 after the state election outcome which showed that a clear majority is possible in upcoming Lok Sabha election in 2014. However, after having a strong Gap up opening prices failed to sustain at new highs and started moving lower from the very next day making a low near 20600 levels last week. From medium term perspective, this simply indicates that positive news is also failing to generate strong momentum and market gets nervous everytime it hits new highs.

Global outlook: Everyone globally was eyeing the FED stand on tapering last week. Finally, FED announced that it will reduce the purchases of assets under QE3. Everyone expected world equity markets to react strongly on negative side as the liquidity will reduce but as soon as the announcement was made US markets started rallying and closed up by more than 1.5% touching life time highs. Trading solely based on news can therefore be very challenging and one should have atleast basic technical analysis techniques to understand the market trend. As per this technique the trend remains positive on US markets which are at life time highs and food for thought is that the crisis of 2008 originated in developed markets that are giving better returns since the lows made in 2009 then against developing markets like India which is still struggling as soon as it touched new highs!

Current week can carry minor positivity and short term outlook:  Sensex reacted positively after RBI maintained its status quo on repo rate and kept it unchanged. There can be short term positivity expected in this week as long as 20600 remain intact on downside. Sensex can touch new highs near 21500 but we think lesser number of stocks will participate and the up move will be on lower volumes and momentum. This level of 21500 is at very important trendline resistance which is valid since 2009 onwards and is sloping upwards. This trendline already acted as strong resistance for 5 times and prices have constantly failed to cross above it. The resistance as per this trendline is near 21500 & this time as well prices should fail to cross above it.

Relative strength index (RSI) a very important technical indicator is already showing that the new highs made on 9^th December was on slower momentum and currently as well equity market can touch new highs but momentum will further reduce.

In short, one should trade with positive bias this week but with strict stoploss and clear targets. Also proper sector and stock selection will be important. IT sector has continued to outperform during uncertain period and stocks from this sector remains our favorite pick.

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Intraday Trading: Crude using Elliott wave & Patterns!

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

Crude showed strong movement yesterday and moved from the lows of 6122 to the high of 6245.

The movement was not random but could have been very well anticipated and forecasted using basic patterns of technical analysis – Head & Shoulders and also applying the concept of Elliott wave theory.

Inverse Head & Shoulder pattern is a reversal pattern and forms after a sustained down move. Elliott wave incorporates this pattern within the wave counts and indicated even before the breakout that the up move atleast towards 6300 is possible using the conservative right shoulder target.

We even gave an intraday call on Crude as “MCX CRUDE JAN BUY ABOVE 6165 REST AT 6142.5 SL 6120 TGT 6232.5” BANG ON!!!

Happened:As soon as Crude moved above 6165 it had a sharp rise and moved towards 6245 by closing

This movement was not random and below is the justification of the intraday call given:

MCX Crude 60 mins chart (January Contract) (as of close on 19^th December 2013)

In today’s morning report following was published

Wave Analysis:

For Nymex Crude, prices continued uptrend and closed on the positive note for 4 consecutive day. As long as prices give close above prior bars high, trend is positive. For today, as long as 98.20 is intact on downside, prices can move towards 98.80/99.

As shown in daily chart, breakout above head and shoulder pattern indicates that intermediate wave A completed at 5800 and start of retracement of prior down move from 7800 to 5800. Over medium term this wave can move towards 61.8% of …………

As shown in 60 mins chart of MCX Crude, as we were mentioning from last many updates that prices are making probable head and shoulder pattern and we were waiting for the confirmation. As expected, prices broke above the important resistance of 6160 and closed on the positive note at 6244.

In short, for today’s trading session ……………

In December commodities used to have subdued movements but this time the market dynamics looked to have changed and there are very strong trending moves ongoing in a few of the commodities.

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Tips on stocks Ashish Kyal Zee Business Waves Strategy Advisors 17th Dec...

Tips on stocks like Elder Pharma, Tata Coffee, Tatasteel by Ashish Kyal of Waves Strategy Advisors. For daily intraday advisory visit www.wavesstrategy.com. Register on website for free trial.

Trading stocks – DLF using technical analysis!

Trading stocks using technical analysis in a systematic way.

The below article shows triangle pattern applied along with Elliott wave theory.

Indian Equity market is moving very different compared to other indices of the world. Nifty made lifetime high of 6415, however, it failed to sustain at higher levels and moved lower constantly. In this subdued movement, a few sectors and individual stocks have been moving more independently.

To understand more about individual stock movement we picked up the DLF from the equity report- The Financial Waves STU which clearly shows that prices had done nothing in last 5 months (August to November 2013) but consolidated sideways between 120-175 levels. It seems that it has formed triangle pattern and currently it is in the last leg of the pattern as per advanced technical tool i.e. Elliott wave theory.

Triangles are probably the most difficult pattern to trade because prices simply trade sideways during this period.

DLF 120 mins chart:

Waves Analysis:

Below write up is of the previous day equity report

DLF one of the stocks from the Realty index which is trading in the range from last 5 months. Day by day, the range is becoming smaller and breakout on either side will indicate good trend ahead.

Since start of 2013 prices were moving lower in downward sloping channel where it got strong resistance on the upper line of the channel. However, for the first time prices managed to move above the channel and started to move higher…

As per wave perspective, prices are probably moving in the form of complex corrective pattern with triangle as the last part of correction. A move above … is important to validate this count.  However, if it does not happen, then it will indicate that intermediate wave …of complex correction is still ongoing.

Same as triangle pattern, there are many continuation and reversal patterns in technical analysis which works very well on stocks, commodities, currency and index.

The question arise that will it be able to break the pattern and resistance level OR it will move lower again? To know the answer subscribe our daily equity report –The Financial Waves STUwhich also covers comprehensive research on Nifty and 3 stocks on rotational basis. For more information visit to us at http://www.wavesstrategy.com/index.php/store.html or Contact us

Application of Trendlines and Channels on Nifty!

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

Trendlines and Channels are the most basic aspect or studies of technical analysis.

These are the first thing a technical analyst learns but slowly this simple technique takes a back seat as the complexity of study increases. I believe that each of the technique has its own value and trendlines are the integral part of the study which cannot be left behind even if one learns advanced concepts like Elliott wave, Fibonacci projections or Cycle theory.

The below weekly chart of Nifty clearly shows one of the most important channels that has been working for many years now.

We published this chart in today’s morning equity report “The Financial Waves short term update” that combines this technique along with Elliott wave for high probable path market can take. A brief outline of the study and combination is given below:

Nifty Weekly chart:

Importance of Trendlines and Channels:

We have been looking at long term trendlines and channels to understand the crucial support and resistance levels. The weekly chart shown above is giving a very clear picture. Prices are taking very strong resistance near the center trendline which is valid since 2009 onwards. It is for consecutive 6 times the center trendline acted as resistance and prior it acted as support on almost 5 occasions. As per Elliott wave perspective, one push on upside is pending and we are pretty sure the same trendline will again act as very strong resistance which is now near ………. levels. Any strong move above ……….. is required to change the price band towards upper half. This chart reflects the magic of trendlines and channels which has been working precisely since 2008 – 2009 onwards.

In short, 6110 – 6140 is the support zone and ………….

When Elliott wave counts are applied along with the above technique it forms a very powerful forecasting tool!

To know how we are applying various different technical analysis techniques together not only on major indices but also on individual stocks you have to simply subscribe to “The Financial Waves short term update” by visiting Pricing page and you will get the research report on daily basis in your mailbox. In case of any queries for understanding the report you can always contact our research analysts.

Elliott wave, Channeling, RSI applied on Nifty

Bottom Line: Nifty uptrend has failed to last for more than 3 to 5 days. The momentum dries out near new highs. Channels providing clear layout.

Nifty daily line chart:

Wave Analysis:

Over past week Nifty has corrected from the highs of 6415 post election result announcement. The up move lasted only for 3 days and then the correction started after making life time highs.Everytime prices reach near new highs the momentum dries out and overall breadth starts to deteriorate. Even this time making new highs have failed to generate strong momentum, indicating that the correction since 2008 is still not complete.

On daily chart, we have shown an upward sloping channel valid since January 2012 onwards. As long as prices do not break above the upper trendline of this channel we can expect subdued action near the upper range. The current ongoing leg is moving in upward sloping red channel which should provide supporting activity near …….. The low made on Friday was close to 6160 levels and the down move has completed 4 days. For more than a year we have observed that the down move normally lasts from …………. days whereas the up move lasts ……. days.

The daily chart also shows the path of ongoing correction since 2008 onwards. Currently, wave ……

Over short term, 60 mins chart is clearly showing an oversold state with RSI reading near 25 levels. Minor consolidation can be expected to relieve this oversold state.

In short, levels to watch will be ???!

The above research and detailed analysis on Nifty is published in today’s morning equity research report ‘The Financial Waves Short term update”. To know detailed analysis and path ahead subscribe now by simply visiting http://wavesstrategy.com/index.php/store.html

Election impact on stocks but trend had been already up from 5970!

By Waves Strategy Advisors, For daily research subscription of Nifty along with 3 stocks,  visit http://wavesstrategy.com/index.php/store.html

“The state election outcome with clear majority of BJP is in lines with expectations. This event can result into a strong Gap up opening today.”

It is really interesting to see that when in 2004 Congress was elected at center market continued its prior strong downtrend, then in Loksabha 2009 market closed on circuit up showing extreme bullishness and now people want BJP to be elected to stay bullish on markets. So there is no consistency in using election outcome to predict markets. But an important thing to observe is that in each of the outcome the prior trend has continued. In 2009 the prior trend was already strongly positive which continued post-election result announcement. Going by the same trend logic if we look at current scenario, Nifty has been in an uptrend since the low of 5970. It has been constantly forming higher highs and higher lows and is now in what is a dream run for anyElliottician a 3^rd of a 3^rd wave.

Nifty 60 mins chart

The above chart clearly shows an up move ongoing since the lows of 5970. This up move has constantly made higher highs and higher lows. Before the event outcome it is prudent to keep the exposure less as volatility can be high. But nevertheless we have been constantly suggesting that the trend has been positive all the while. Below is the excerpt from the 6^th December 2013morning report:

“By simply looking at the charts and Elliott wave counts it seems prices are now in wave iii. This wave iii should travel towards 6400 - 6440 levels where wave iii = 1.618 * wave i. The strong Gap up opening simply reflects the ongoing social mood as of now and expectation of BJP coming in states with majority. Socio-economic studies indicate that post period of extended correction, there is tendency of people to select the extremist parties as they are too bugged up with the existing government whom they think is responsible for the bad economy. President Obama was elected during distressed time and he was re-elected as markets produced positive returns during his tenure. So we can expect in upcoming central election people might tend to select BJP or other parties over ongoing Congress government.

Coming back to Nifty our outlook is going to be bullishbut there is an alternate possibility of wave x ongoing as shown in red on 60 mins chart. … But as long as 6190 is now intact we will stay bullish.

In short, the trend continues to be positive and existing longs can now trail stop towards 6190 levels. As high volatility can be expected keep less exposure since on Monday we can see a movement of anywhere between 150 to 200 points on Nifty. If the event outcome is as expected then we can have strong Gap up in wave iii of 3 else short term...”

Nifty is going to have an opening with a Gap up of nearly 200 points as shown by SGX. We cannot be more accurate than this. We also cautioned in case the event does not go as expected what should be the crucial levels to observe.

Many would turn bullish after the Gap up move today but the best of the trend might be missed. If our long term forecast is correct as shown in Monthly report then this can be just the beginning. At the same time knowing the short term moves is important to time the market.

Subscribe to the equity report “The Financial Waves short term update” and see yourselfwhywe have been bullish all the while on Nifty and stocks and path ahead from here. The report is sent to your email id daily and subscription can be done by simply visiting http://wavesstrategy.com/index.php/store.html

Nifty:Understanding triple corrective pattern – Part II

We discussed about double corrective pattern previous Friday on Nifty. Here is the link of that article – Double correction by Waves Strategy Advisors. The below article highlights on triple corrective pattern.

Elliott wave Triple corrective pattern: As per this pattern 3 corrections are combined together with a corrective pattern in middle known as “x wave”. 1st set of correction is combined with 2ndset of correction which is in-turn connected with the 3^rd set of correction with x wave joining them. So a triple zigzag correction is a-b-c-X-a-b-c-X-a-b-c.

The below chart shows 3 zigzag patterns connected together. The labeling can be w-x-y-x-z or a-b-c-X-a-b-c-X-a-b-c. Post pattern implication of a triple correction is that we can expect a move in opposite direction of around 61.8% to 80% once this correction is complete.

Nifty 60 mins chart:

In the above chart, we can see after completion of wave z of triple correction Nifty moved up from 5570 to near 6100 level where it touched 80% retracement to the point thereby achieving the post pattern target.

We can also see that before the downtrend started there was Head & Shoulder topping pattern as well. Elliott wave combines the traditional pattern as well and gives a powerful forecasting tool.

In daily research we always thrive to understand the patterns and apply it to the best of our ability. There are times when Elliott wave counts can be very tricky but future is probabilistic and we constantly thrive to read what markets are trying to communicate.

To view the Elliott wave count on daily basis on Nifty and 3 other stocks subscribe to “The Financial Waves short term update”. Visit http://wavesstrategy.com/index.php/store.html for subscription options or Contact US

Stock Tips on Zee Business for the day

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Below are the 5 stocks strategies given by Ashish Kyal on Zee Business before the equity markets opened

1.  Axisbank 

Since mid of November 2013 prices are moving higher in the upward sloping channel. Even in the down move in broader market, Axis bank managed to protect the support level and closed on positive note. One can buy Axis Bank on dips to 1180 with the stoploss of 1170 and for target of 1240

2. BHEL

In the previous week prices have breached the strong consolidation of 2 months on upside and rallied sharply. This sharp move on upside has resumed the uptrend and indicates the positivity in this stock. One can buy BHEL at cmp 164 with stop loss of  160 and for target of 172

3. MCLEOD RUSSELL

On recent trading session we have observed the participations of Midcap and Small cap. McleodRussell has given consolidation breakout near 285 levels. This is positive sign for short term. One can buy Mcleod Russell on dips to 293 with the stop loss of 291 and the target of 304.

4. Adani Power

Yesterday we witnessed consolidation breakout in Adani Power with higher volume. This is positive sign for short term. One can buy Adani Power on dips to 37.50 with the stop loss of 36.50 and the target of 41.50.

5. Whirlpool Ind

Whirlpool Ind is from consumer sector and this sector looks positive. Whirlpool has given Inverse H&S breakout near 180 levels. One can buy Whirlpool on dips to 186 with the stop loss of 181 and the target of 204.

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. Visit www.wavesstrategy.com