Forecasting Nifty using Elliott wave pattern! What’s next?

The below article highlights how forecasting can be done using Elliott wave and channel techniques along with Fibonacci ratios.

The research is taken from “The Financial Waves STU” published in the morning of 24^th February 2014, which includes Nifty and 3 stocks. On 24^th February 2014 morning we had shown the probable path Nifty should follow over short term when the index was quoting near 6150 levels.

Nifty 60 mins chart: ( Anticipated on 24^th February, 2014)

Nifty 60 mins chart: (Happened today)

Wave Analysis:

On 24^th February 2014 we mentioned that “As shown on 60 mins chart, prices are now in 2^ndset of corrective pattern. We are showing one of the probable paths that prices might follow.This path is in sync with short term cycle which is due on 26^th – 27^th February. This cycle has worked very well since we have shown and over past few times it has formed……In short, we can now expect a move towards 6200 – 6240 over short term as long as 6060 is protected. Volatility can increase due to expiry in current week and we will be keeping a close tab on broader markets to further gauge …”

Happened: As expected, Nifty followed our mentioned path accurately. The above chart clearly reflects that. In the today’s morning session, prices made a high of 6274. Now, prices have also retraced 76.4% of the prior fall and time cycle is due which has worked very before. However there is no price confirmation for now but indicators are getting lined up together. Under such scenario it is important to wait for break of crucial levels for further direction. What should be the trading strategy from current levels? To know the next wave in Indian markets, subscribe to“The Financial Waves Short term update”. For more information, visit Pricing Page.

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HINDALCO: Trading using Ratio Analysis!

The below research is by Waves Strategy Advisors. For daily research report subscription visit http://www.wavesstrategy.com/index.php/store.html

Indian markets continue to move with rotational rally concept.

In this kind of market, it is better to understand which sectors or stocks will underperform or outperform Nifty. Hindalco is one of the stocks from metal space which is underperforming the Nifty. In the mid December 2013, share prices were trading at 126 levels and currently moving at 98, almost 20% down from the highs of December 2013.

Below is the part of research taken from“The Financial Waves STU” which was published in the morning of 25^th February, 2014. We have shown Hindalco/ Nifty Ratio analysis which clearly suggest that, from the start of 2011, hindalco is underperforming Nifty. In the month from September to December 2013, this ratio tested the resistance of 0.20 twice but it failed to move above the same and moved lower, which suggested that weakness to prevail over short to medium term.

Hindalco/Nifty Ratio chart:

Wave Analysis:

As discussed in the previous update of 31st January 2014, “In short, as long as 108 is intact on upside and prices persist within the falling red channel our bias remains negative in this stock and prices can move lower towards the next support of 100 / 99”. BANG ON!!

Hindalco moved precisely as expected. Prices sustained below the strong resistance of 108, sustained within the downward sloping red channel and achieved both the targets of 100/99. After achieving the target, prices moved lower below 61.8% retracement level and closed on lower note since 3 trading sessions.

Above we have shown Hindalco/Nifty ratio daily chart since 2011. In 2011, ratio has formed top near 0.044, thereafter prices have been moving lower by forming lower highs and lower lows. This indicates the underperformance of Hindalco against major index Nifty. Time Cycle of 243 days works very well on this ratio chart. This is the Topping Time Cycle and it has provided the top for 2 times since 2011. Recently, ratio has approached the same cycle and reversed from the resistance of 0.020. In short, as long as 0.020 is intact on upside underperformance of Hindalco will continue against Nifty and it can move lower towards 0.011/0.10. 

As seen above in 120 mins chart, prices are moving lower in the downward sloping red channel brilliantly. As per wave perspective, intermediate wave …………..

Along with the ratio analysis, we have shown daily and 120 mins chart with Elliott wave count which helps to do better forecasting for future. In this challenging trading environment, it is better to use objective techniques. Just Subscribe to “The Financial Waves STU”which includes intense research on Nifty with 3 stocks where short term trading opportunity exits. By subscribing to this report, one can make his own trading strategy for better trading. For more information, visit to pricing page.

Bank Nifty Elliott wave counts and trend ahead!

Bank Nifty is one of the indexes which has underperformed Nifty since May 2013.

If we just compare the charts of Nifty and Bank Nifty, then Nifty is consolidating between the range of 5900 and 6350 since November 2013, whereas Bank nifty is clearly moving in lower highs lower lows pattern from the start of December 2013.Before 2 months, prices were trading at 12250 levels , however, recently it has retraced 61.8% of prior up move, made a low near 10000 levels and bounced back on upside. Now, the question arises that, whether underperformance of Bank nifty will continue or more upside is possible from the current level?

We have been applying Elliott wave theory along with basic technical analysis to know the next short to medium term trend ahead.

Below we have shown part of research taken from “The Financial Waves STU” which was published in today’s morning report.

Bank Nifty Daily chart: 

Bank Nifty 60 mins chart:

           Wave Analysis:

As seen above in daily chart, after completing wave B near 12200 have moved lower, breached the wedge pattern on downside and retraced exactly 61.8% of the prior up move from 8400 to 12200. 61.8% is an important retracement level. Also momentum indicator RSI has turned from the support of 30. This indicates the positivity over short term before it resumes the downtrend.

As shown in 60 mins chart, in the start of February 2014 prices found support near lower end of the channel and bounced back on upside. In past 6 trading sessions we have observed an up move in major index Nifty. Bank Nifty is currently moving along with Nifty and has been outperforming during this period. Thus there is high probability of prices to break the channel on upside and continue the uptrend.

As per wave theory, sharp move on upside suggested the end of simple correction a-b-c and currently prices are moving higher in the form of wave x. Wave x has retraced 50% of the prior wave c. A move above 10600 will break the channel and open further positive possibilities. This scenario remains valid as long as 10100 is intact on downside.

In short, move above previous high of 10600 will take prices higher towards 10900/11000 where 76.4% retracement is placed. However, move below 10300 will result into range bound movement.

The above research is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. This research report has view and outlook on Nifty with 3 stocks short to medium term. For subscription option please visit http://www.wavesstrategy.com/index.php/store.html or any other details Contact at helpdesk@wavesstrategy.com or on +91 22 28831358 / +91 9920422202

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Why Elliott wave should be combined with other technical analysis methods?

The below research is by Waves Strategy Advisors. For research subscription on daily basis visit http://wavesstrategy.com/index.php/store.html

Elliott wave classifies the movement of market either as impulsive or corrective. 

Impulsive moves are simple 5 wave structure with 3 basic rules to be followed whereas corrective waves have many varieties. Trading Indian equity market has been a challenge due to the fact that most of the time prices are either moving in sideways action or forming complex corrective structure. A Gap down opening of 60 points yesterday and then again a Gap up opening today clearly indicates a complex formation is underway. During such times it is imperative to keep exposure less and in direction of minor trend which seems to be up as of now.

The below chart is picked up from “The Financial Waves short term update” a daily research report that covers Nifty and 3 different stocks which assists in trading from short term perspective.

Bottom Line: Yesterday’s bar further confirms that Nifty up move is corrective in nature.

Nifty 60 mins chart:

Wave Analysis:In previous update we mentioned that “In short, it will be important to see if Nifty can manage to cross above yesterday’s high near 6160 for positivity to continue today else range bound movement can be expected. Any Gap down opening if not filled during the day will be cautious sign. Fresh longs should be avoided given the fact that prices have already formed 4 consecutive blue bars as of yesterday.”

Nifty continued to maintain its status quo of not forming more than 4 to 5 blue bars. This simply shows that there are certain patterns and structure we have to observe on charts which market follows time and again. Nifty had a Gap down opening of nearly 25 points and prices managed to sustain the Gap throughout the day. Interestingly, in the entire up move from 5930 to current levels we have not observed a single Gap up opening which is sustained. Such movements are signs of corrective structure rather than impulsive.

As shown on daily chart, since September 2013 onwards prices are moving within the range of 5900 to 6350. Even this time prices made a low near 5930 and reversed back upside for a probable move towards 6200 levels. Trading within a range bound market can be challenging as each of the legs are corrective and not impulsive. Corrective patterns can be complex and tricky to identify beforehand. So it is important to combine wave theory along with other techniques likeCycles, RSI, Bar technique, Moving average crossovers.

From medium term perspective, ………… if prices can move above ……. to resume the uptrend or breaks below ………. for minor negative confirmation.

In short, ……………

Subscribe now and see yourself how to trade in this challenging environment and what is the major direction for Indian equities. Visit Pricing Page and select “The Financial Waves STU” and we will setup daily research report to your mailbox.

Nifty Elliott wave counts and short term trend!

The following research is picked up from "The Financial Waves short term update". It is a daily research report by Waves Strategy Advisors. For subscription options visit  http://www.wavesstrategy.com/index.php/store.html

Bottom Line: Nifty has managed to protect the weekly low made at 5933. Breakout from the range is important for clear direction.

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that “Due to interim Budget today, volatility can be high and closing will be important. Failure to close above 6100 or below 5980 will continue the sideways action.”

Nifty had a minor Gap up opening yesterday and prices stayed between 6100 and 6040 level throughout the day. There was minor spike on downside during the interim budgetary session that sounded more of an election campaign on what UPA government did over past 10 years than anything else. Index managed to close near the day’s high but still below 6105 level by closing.

As shown on daily chart, it is unclear as of now if the low made on 4^th February near 5935 is where double corrective pattern in form of wave w ended or it completed near 5984 in form of truncation on Friday. For latter counts shown on above 60 mins chart, prices have to break above 6105 levels before today End of day. Failure to move above this level will open up a few probable scenarios like triangle or complex x wave is ongoing.

Prices have moved between a narrow range for 9 days now. It is due for a breakout either above 6100 or below 5950. Close above or below these levels will result into short term trending direction. Looking at the chart patterns of stocks it seems that majority of them are completing 5^th wave and showing positive divergence after arriving at crucial levels.

As shown on 60 mins chart, prices are now near the upper end of the Bollinger Bands and failure to cross above 6105 today can result into subdued movement within the mentioned range. Such environment is challenging more from intraday trading perspective since it is unclear whether to bet on breakout or to follow the strategy of selling near resistance and buying near supports when markets are already in a range for 9 extended days after 8 days of down move.

In short, expect a breakout soon from this range. Close above 6105 can take prices towards 6200 – 6240 whereas any move below 5940 will result into resumption of downtrend. Wait for breakout for next trending opportunity!

The above was published in morning research report "The Financial Waves short term update" To see Nifty along with stocks short to medium term forecast visit http://www.wavesstrategy.com/index.php/store.html

Nifty Relative strength index (RSI) – A different technical analysis perspective!

The below research is published in today's morning research report "The Financial Waves  by Waves Strategy Advisors. For various subscription options visit http://www.wavesstrategy.com/index.php/store.html 

Relative Strength Index (RSI) is one of the most widely followed technical indicators. Many traders use this in order to understand if the market is in overbought or oversold state and if there is positive or negative divergence.

We take a step ahead in looking at this simple indicator in a very different way and how it helps to understand the trend of the market.

The following excerpt is picked up from “The Financial Waves short term update” our daily research report on Nifty along with 3 different stocks. Read further to know more how we are applying RSI in addition to Time cycles, Channels and Elliott wave counts.

Bottom Line: Nifty broke above the 3 days range but only to re-enter later. The action continues to be subdued!

Nifty 60 mins chart:

Other studies and Elliott wave counts are purposely removed from above chart.

Wave Analysis:

In previous update we mentioned that, “In short, move above 6095 or below 6020 followed by 5950 is important for short term direction. Unless that happens, sideways action will only make traders more complacent exactly before big moves.”

Different way to look at RSI:The daily RSI has again bounced back from 30 levels. This level has worked very well since past 3 years. RSI reading of 22 was last seen during the downtrend of 2008 and then later in 2011. We are keeping a close tab on RSI reading and if the resumption of downtrend can lead RSI towards this level of 22 which will indicate a bigger degree correction on downside

The same concept of RSI when applied to 60 mins chart gives important information. The reading of 20 is seen in the recent selloff. This reading on RSI was observed only during the downtrend when Nifty touched the level of 5118 in August 2013. This further confirms that the up move from5118 to 6355 is complete and the current market will be in sell on rallies mode as long as RSI 80 level is intact on upside. This is a very different way of looking at a very common technical indicator.

In short, we continue to think the medium term trend as down on Nifty but minor positive move cannot be ruled out. Move above 6100 can take prices towards 6140 levels whereas move back below 6050 can result into sideways action to continue. Break of ………. will confirm resumption of medium term trend on downside.

We do not rely on one single indicator for direction but combine it with Time cycle and this time as well prices have turned exactly at the cycle hour. It is at times a thrilling experience to see Cycle theory working to the point. Further along with Elliott wave counts it provides a very strong trading setup environment. Subscribe to “The Financial Waves short term update”by visiting the Pricing Page or Contact US for more details.

How to Trade using different technical analysis techniques?

Technical analysis is a vast field having varieties of techniques and indicators. 

Many people look at technical analysis as simply drawing trendlines or channels and just using a few patterns or indicators.

Elliott wave is advanced concept of technical analysis which provides holistic approach to the entire application and that encompasses basic patterns like Head & Shoulder, Triangles, Wedge, etc and also an indicator like RSI, ROC, MACD makes a lot more sense when looked along with price wave counts. For example: Wave 5 and wave 3 normally shows negative divergence meaning prices make new highs but indicators make lower highs. Basic technical analysis indicator suggest that the upside momentum is reducing but when we apply Elliott wave counts along with this indicator it also gives us the path prices will follow. By only applying indicator does not give us strong forecasting ability but combining with wave theory and Fibonacci ratios provides probable future path the stock or index should follow.

The below chart is of Nifty during 5 waves up move with classical negative divergence and Wedge pattern formation as on 31^st January 2013:

Nifty daily chart: (data 31^st Jan 2013)

 Movement as of 20^th May 2013:

After completion of 5 wave on upside prices correct in 3 waves structure. Also wave 5 and wave 3 above shows classical negative divergence i.e. prices made new highs but RSI made lower highs indicating upside momentum has been reducing.

The above example simply shows how Elliott wave and Fibonacci ratios can help to forecast future price direction which only using indicator, channels and other basic techniques might lack. At the same time basic techniques are also the core of Elliott wave principle and have to be used to derive high conviction trade setups.

Many might claim that identifying trades or looking at markets in hindsight is simple but forecasting the future is always challenging. But we have done that before at the top of January 2013 and again in January 2014. We do it every time majority of indicators and Elliott wave counts gets in sync and do not hesitate to forecast against the majority of crowd. You can see the article we published on 11^th January 2013 - Nifty path ahead and an upcoming Tsunami! The above charts are not random but picked up from the actual research reports we publish on daily basis.

To know what is next from here and get the latest forecast on Indian equity markets along with stocks you can subscribe to “The Financial Waves short term update” and see where we think Nifty and majority of stocks are headed from here. Learn yourself on how to combine various basic techniques and advanced technical analysis – Elliott wave together.

To subscribe to our Equity Research Report visit http://wavesstrategy.com/index.php/store.html

Ashish Kyal,CMT is conducting 2 days training workshop of Advanced Elliott wave in Mumbai on 1^st and 2^nd March 2014 at Hotel Grand Sarovar Premiere.

To get more details for the training visit http://wavesstrategy.com/index.php/free-articles/trading-lessonsa-education/743-training-on-neo-wave-advanced-elliott-wave.html

Training on Neo Wave - Advanced Elliott Wave, Identify best trade setups with practical examples

Neo wave is an advanced part of Elliott wave and is coined by Mr. Glen Neely. In simple Elliott wave there are only 3 basic rules. However by using only 3 rules for impulsive structure there are couple of probable scenarios always running. 

Neo wave has many rules to define a simple impulse pattern which are very rare. This tends to reduce the subjectivity and provide objectively the most probable scenario that can occur.                                        

Does any one of the following happen to you?

• You buy stock on the basis of good news or better than expected result and price of the stock still keeps falling after you take the long position?
• Why does market moves in your favor but only after hitting your stoploss?
• You are always out of the market during best of the trends!

If your answer to any one of the above question is YES, then you belong among 80% of crowd that faces similar situations every day. One of the most common requests we get from subscribers is that can you teach me how to look at a chart and find opportunities for myself? Our Trading course on Neo Wave - Advanced Elliott wave will teach you how to identify and trade those opportunities.

Whether you are an Intraday or Positional trader or want to invest in stocks, commodities or forex, futures or options – you get a practical trading education that you can apply immediately. It is plausible to forecast freely traded markets with high accuracy but provided you have the understanding of necessary technical tools.

About Speaker:
Course conducted by Ashish Kyal - Ashish Kyal is a Chartered Market Technician (CMT)– Degree provided by Market Technicians Association (MTA – USA). He writes for MTA newsletters and is a frequent speaker on business channels like Zee Business, CNBC TV18. He is a regular columnist for Economic Times section of Navbharat Times, a leading newspaper in India. He has been interviewed by Swiss Business Channel on Indian Economy. Ashish carries vast experience of analyzing World Equity and Commodity markets using techniques like Elliott Waves, Time Cycles, and momentum tools. He frequently speaks at financial seminars like Financial Technology, Market Technicians Association (MTA - USA) Association of Technical Market Analysts (ATMA)

Where and when is the course?
The training is at Hotel Grand Sarovar Premiere, Goregoan, Mumbai on 01^st-02^nd March 2014. This belongs to 5 star category having chain of international hotels and the fees is including Tea / Coffee and Lunch.

Registration Fee: 
The charges for the Training is Rs. 10000 + 12.36% Service tax =Rs.11240/- (Till 31st January 2014). 

If enrolled after 31st January 2014 the charges will be Rs.13490/-

Existing subscribers to any of our research products can avail a discount of 10%

Registration is on first come first basis as there are limited seats.

How to Enroll?
To register for the training using either Credit Card or Net banking visit http://wavesstrategy.com/payment/ and mention Product as “Neo Wave Training” and period as “1”.
OR
Fill in details at http://wavesstrategy.com/index.php/contact-us.html and we will get in touch with you.
OR
Write to us at  helpdesk@wavesstrategy.com /call us at +91 9920422202 /+91 22 28831358

Nifty Elliott wave predicting patterns and trading strategy!

Nifty has been moving precisely as per the Elliott wave pattern. The below chart shows the double corrective pattern and the short term path it should follow (Blue line).

The below chart was published on 5^th February morning.

Nifty 60 mins chart: (as shown on 5^th February morning)

Happened today as of 11 am

Nifty has moved to the point as expected. Prices are moving in double corrective Elliott wave pattern and as mentioned earlier there are times when patterns are very clear and predictability is high and at complex corrections it can be low. Currently after 3 months of low predictability Indian markets have been forming known patterns.

In addition we also give Nifty trading strategy in “The Financial Wave trading update”. Today’s morning strategy was “For today, short positions can be created on move below 5995 with 6220 as stoploss and target of 5965. Long positions can be created if Nifty moves above 6050 with day's low as stoploss and target of 6090.”

Happened: Nifty made a high of 6048.35, broke 5995 and almost achieved target of 5965. The exact low is 5966 so far!

To know what is next after the completion of wave c of 2^nd correction subscribe to “The Financial Wave Trading update” giving Nifty trading strategy during the day. Prices have now arrived near crucial levels again. 5970 has lost its significance as expected.  Visit http://www.wavesstrategy.com/index.php/store.html and subscribe now to the Nifty or Equity report and see yourself the short to medium term trend for Indian markets.

Elliott wave: Nifty moved below 5970 but reversed exactly as expected! Trend is still negative!

The below research is picked up from "The Financial Waves short term update" and was published today morning before equity markets opened. We did mention that a break of 5970 will turn many bearish exactly at wrong time! To subscribe this daily research report visit http://wavesstrategy.com/index.php/store.html

Bottom Line: Nifty continued to move lower and is approaching towards 5970 level which should be momentarily broken to trap fresh shorts at lower levels!

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that, “In a nutshell, short term consolidation cannot be ruled out but is not necessary. Move below 6040 will resume the downtrend and prices can travel towards 5970 levels which is crucial level on downside whereas any move above 6110 can lead to minor bounce back. On upside 6170 level can be utilized as trailing stop.”

Nifty had another Gap down opening of around 30 points and prices continued to drift lower throughout the day making a low of 5995. Yesterday’s fall was different from the previous ones in a way it was more of a steady decline and very less intraday volatility. Such systematic fall cannot mark an end to short term trend and before reversal we should see the struggling between bulls and bears. Looking at the individual stocks there is positive divergences but if the fall continues from here these divergences will not carry any value. We also think prices might break 5970 level this time atleast momentarily which might be a trap for traders initiating fresh shorts at lower levels based on break of important support. Nevertheless the trend is down with 6097 as important resistance level on upside.

As shown on 60 mins chart, prices are moving in a red downward sloping channel. We are showing one of the possible wave counts as corrective on downside with a-b-c-x-a-b-c and prices are currently in wave a of the 2^nd corrective pattern. 5950 level on downside is where wave a will be equal to 61.8% of prior minor wave a. Break below 5950 will extend this wave a further on downside.

The high beta sectors showed minor bounce back on Friday but it was only short lived as expected and both Midcap and Smallcap sector again closed negative. Existing short positions from 6280 highs can now trail stop towards 6097 which is very important level on upside.

In short, our bias will be negative unless we see a move above 6097 level and we doubt if 5970 will provide any support this time. If a Gap down opening is closed instantly with sharp reversal on upside that will be first sign of reversal but unless that happen ride the trend as long as it lasts rather than catching a bottom!

Subscribe now to "The Financial Waves short term update" that shows Elliott wave counts along with other technical studies and 3 other stocks. In last week's report itself we mentioned that 5970 level will be broken this time. To know what is next from here after the 5th Gap is filled subscribe by visiting http://wavesstrategy.com/index.php/store.html and select "The financial Waves stu" The report will be sent on daily basis on the email id and can also be accessed under Client login section of website.

Why is Equity market falling? By Ashish Kyal in Economic Times section of Navbharat Times!

Pressure on Indian equities can continue for few more weeks!

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

For daily research reports or advisory visit www.wavesstrategy.com

In the previous week sharp sell off was seen in Indian Equity market and major index Sensex closed on negative note by more than 3% compared to previous week’s close. Weekly and monthly closes provide important information about the overall trend of the market. Previous week, Monday started with a strong Gap down opening on Sensex and the selling pressure continued till Thursday. It formed not only bearish weekly bar but bearish monthly bar as well.  More importantly, prices have closed below the December month’s low. This negative bar on monthly chart was last seen in August 2013. This has turned the monthly as well as weekly trend from sideways to negative. Also this strong selloff was in lines with our technical studies that showed lack of momentum and strength on upside and more number of stocks moving down even if index was near new highs.

NSE Advance decline line is a simple technical indicator which shows the overall breadth of the market. Even when Sensex was near 21400 levels this indicator was moving lower indicating more number of stocks were closing negative as compared to advancing stocks. This is known as negative divergence and it warned about weak upside momentum.

World Markets:In the previous month, DJIA showed a fall of more than 950 whole points from the lifetime high of 16585. Along with this other developed markets like FTSE (UK), DAX (Germany) and CAC (France) deteriorated by more than 6%. India was already underperforming and the selloff in developed and other emerging markets should put more pressure on Indian markets.

Banking index under pressure: In the start of January Sensex made high of 21330 whereas Banking index failed to move above the previous high of 12000 which was formed in the month of December 2013 and moved lower sharply. PSU banks like SBI, PNB, IDBI, had seen strong selling pressure in previous week. RBI governor Mr .Raghuram Rajan surprised most of the economists with repo rate hike by 25 bps to 8%. This did not help banking stocks which were already under strong pressure. As long as 11000 is intact on upside in Bank Nifty, this sector can continue to be in downtrend.

Week ahead:Taking into account the perfect sync of developed and developing markets, declining advance decline ratio, weakness in broader market, negative weekly and monthly close we think Sensex short term top is in place. This week we can expect sideways to negative action to continue. On upside 20900 should act as strong resistance which was previous support (polarity reversal) and on downside 20150 is very important support level from where Sensex has bounced back twice in November 2013. During downtrend volatility can be high, so trade cautiously and systematically!

Subscribe to daily research report with Nifty Elliott wave counts and other technical studies by visiting www.wavesstrategy.com