Friday, March 28, 2014

Nifty: Astonishing alignment of Time Cycles, Channels, Momentum, Elliott wave & much more!

We have read about alignment of stars, alignment of planets, equinox, eclipses and more.
These are universal systems following well defined Time patterns. Here we are not evaluating whether these alignment produces impact on stock markets. I am not an expert to comment on this but only a believer of linkages between Equinox and stock markets.
Going to the topic directly the below shows classical alignment of important technical indicators and Time cycles. Alignment is an integral part of universe and so is in stock market!
Indian equity marketsare touching life time highs and making headlines. Everyday there are some stocks leading index higher. But the big question to ponder upon is to understand whether this is indeed start of next bull trend or just another trap for late entrants?
In today’s morning research report “The Financial Waves short term update”our flagship product - daily Equity newsletter we have shown classical alignment of many basic and advanced technical studies – Time Cycles, Channels, Momentum divergence, Elliott wave countsall are synchronized together. Such synchronizations are a rare event which probably occurs once in a year. Below gives a brief overview:
Bottom Line: Nifty continued to move higher on the last day of March series. It is arriving near the cluster of Time Cycles, Channel resistance, Momentum divergences.
Nifty daily chart:
(Elliott wave counts, levels, other details are purposely removed from above chart)
Wave Analysis:
Following is published today morning in “The Financial Waves short term update”See below the beauty of Technical alignment but let us just wait for prices to confirm:
Nifty continued to move higher and at one point broke above the resistance level of 6650 and touched 6670 levels but finally settling near 6640. Such movement cannot be ruled out on the expiry day and immediately following day i.e. today. We have observed reversals a day or 2 after expiry. We will not change our stand when the cluster of technical evidences are overwhelming and aligned together on the day of 1stApril. Following is the technical picture and such series of clusters were last seen during January 2013 top. However, price confirmation will be the key as mentioned earlier and unless we see a ……….. trend will be positive.
8 different technical indicators pointing to one thing– A classical alignment
1. 49 days Time Cycles:This is one of the most important daily Time cycles we have come across that has worked brilliantly for many months now. I have evaluated many cycles but the turning range as per this cycle is the most accurate so far………
2. 74 period Time cycles:The hourly chart shows 74 period Time cycle. This short term Time cycle also provides the turning dates after every 10 or 11 trading days. This is also due on ……. which is almost coinciding with ……. 2 very important Time cycles.
3. Daily and hourly RSI – Daily RSI has already reached important levels………
4. Important channel resistance:
5. Elliott wave structure:
6.Synchronization with USDINR
7.Breadth indicator – Advance Decline line
8.5 days of blue bar formation
In a nutshell, when so many technical parameters are aligned together does it mean to act now or wait for price confirmation? I think prices are supreme and is one parameter which has not confirmed so far. But we know what levels will bring this final ingredient of price in alignment with above.  
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Thursday, March 27, 2014

IPL match fixing and India Cement chart!

IPL match spot-fixing and betting scam by Chennai Super King has forced Supreme Court to askSrinivasan and other members who are related to India Cement to step down from their respective post from BCCI for free and fair probe.
Even more to this Chennai Super King might not be allowed to play IPL this time as his son-in-law has been indicted for passing inside information to bookies.
India Cements 60 mins chart:
But what is the outlook for stock?
The above chart clearly indicates that the stock is in downtrend since start of March and as long as this channel is intact the trend can continue on downside irrespective of the event associated. News can result into subjective decision making. For objectivity apply techniques mentioned above!

Wednesday, March 26, 2014

Nifty and Reliance Industries correlation and breakout zone!

The below excerpt is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. For subscription to daily research report visit

Date: 24th March 2014 morning report

Nifty formed an inside bar smaller than the previous bar. Reliance and Nifty both at crucial levels! Nifty levels to watch are at 6580 and 6430. The below research gives a brief overview on correlation between Reliance Industries and Nifty.

Nifty, Reliance and Ratio daily chart: 

Wave Analysis:

In previous update we mentioned that “In short, there is no change in our outlook as of now which is sideways to topping. Even the stocks are not providing a clear direction. Break of crucial levels shown on chart will determine the trend over short term and intensity of the movement will indicate medium term outlook”

Nifty continues to move in 35 to 40 points range. On Friday, the movement was confined between 6520 and low near 6485 thereby forming an inside bar. It has been 9 days and prices have swayed between 6575 and 6430 which is a movement of 135 points in totality. Saturday was a short trading session and hardly produced any movement.After the sharp up move of 3 to 4 days markets are ensuring to form a challenging trading environment. During sideways action the best technique that works is Bollinger bands and we have used it prudently. The short term wave counts have 2 to 3 different possibilities even now and channeling technique is suggesting there is not much room left on upside. Nevertheless looking at sideways action after sharp rise there is still a possibility that one minor leg towards 6580 – 6630 might be pending. On contrary, violent break of 6425 will indicate atleast retracement of the up move from 5980 to 6575 has started. A slow and sideways drift below 6425 will not carry much importance. So it will be important to see the intensity of move when 6580 or 6425 is broken.

Nifty and Reliance Industries correlation:

On the 1st chart we are showing similarity of pattern between Reliance Industries and Nifty. Both the stock and index looks to be forming a triangle pattern. This corrective pattern is ongoing since 2008 onwards. The reason of comparing the index with Reliance Industries is that we think this can be one of the stock which will be leading the index in next Bull Trend. So a breakout on RIL will indicate a breakout on index as a very high possibility. However, even this time RIL came close to the strong resistance zone near 910 – 930 and reversed back on downside. It has been more than a year since this stock is moving within the range of 770 – 930.

Reliance is forming a symmetrical triangle whereas Nifty is forming more of an ascending running triangle pattern. To get confirmation of triangle breakout we should see a sharp and violent rise after the breakout and if the momentum continues to be slow and dragging even if the trendline is broken we will look at it only as the part of the pattern formation.

Even though Reliance has been a major laggard post 2008 but the correlation has been very high with index with each major turning points happening within few months horizon. The ratio of Reliance / Nifty (red line) shows that the gradual reduction in slope of the fall indicating that thee underperformance has been constantly reducing. A break above 0.16 level will be first strong positive sign that Reliance has started the period of strong outperformance for months to come.

In short, expect a breakout to occur in this week as the sideways correction is already 9 days old. Also a close watch on Reliance Industries is imperative in case this stock leads the direction of movement for major market. Till that happens patience will be warranted!

The below excerpt is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. For subscription to daily research report visit

Monday, March 24, 2014

Ashish Kyal market outlook in Economic Times of Navbharat Times

Sensex at crucial levels. View on Banking, IT, Reliance Industries
The below is the English transcript of article by Ashish KyalCMT Director of Waves Strategy Advisors in Economic Times section of Navbharat Times.
Sensex showed a sharp move on upside from 20200 seen in mid of February towards 22000 levels as of 10th March 2014. This sharp up move was a rise of more than 2000 points. Within this period the Banking sector and Capital Goods showed good strength against IT index which has been under pressure over past few weeks. Infosys shares lost nearly 10% in single day after poor futures estimates by the management. This fall was a surprise to many participants. Later TCS also started showing weakness and it seems IT sector as a whole should now enter consolidation after spectacular performance of past year.
Elections will be trigger: Election will be a major trigger that will decide the clear market direction. A clear majority is required by market participants for strong rally. This will help to speed up the infrastructure projects and focus will be on getting growth back on track. 
RBI action will also be important: RBI action in 1st week of April will be important. Last time RBI increased repo rate to curb inflation and stabilize report. This put pressure on markets. This time it will be crucial to observe if RBI maintains the repo rate at same level which will be important for short term support to stock markets.
Nifty and Reliance Industries correlation:
Reliance Industries is one of the stock in index which has under performed since the start of 2008 correction. This is one of the major reason why Sensex and Nifty has failed to generate strong momentum as Reliance Industries and few other heavy weights have not supported the rally. The reason of comparing the index with Reliance Industries is that we think this can be one of the stock which will be leading the index in next Bull Trend. So a breakout on RIL will indicate a breakout on index as a very high possibility. However, even this time RIL came close to the strong resistance zone near 910 – 930 and reversed back on downside. It has been more than a year since this stock is moving within the range of 770 – 930.
Week ahead:In short, expect a breakout to occur in this week as the sideways correction is already 9 days old. Also a close watch on Reliance Industries is imperative in case this stock leads the direction of movement for major market. Till that happens patience will be warranted!
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Friday, March 21, 2014

Nifty: Understanding Average Directional Index (ADX) for trend ahead!!

Nifty continues to move in narrow range near the important channel resistance.
Prices showed trend from 6200 to 6562 in span of 5 days and since then it is in non-trending mode from last 7 days. In today’s trading session even till 1.30 p.m, it was intact in between the important levels. Even heavyweight stocks such as Reliance, ICICI Bank, DLFMaruti, PSU Banks, etc. have arrived near the crucial zone. On the other side RBI will be revising its interest rate policy on 1st April 2014 but we have seen over recent pasts, interest rate hike resulted in markets going up the same day. So markets might not always behave in logical way we perceive. Elliott wave patterns on other hand helps us to understand the structure and trend we can expect irrespective or event outcome!
During this kind of environment, it is necessary to combine other indicators with Elliott wave theory and basic technical analysis to get the clues for the next short term trend ahead. This time, we have used Average Directional Index to gauge the strength in the current up move.
Below is the part of research taken from The Financial Waves Short term update where use of Average Directional Index (ADX) is explained.
Nifty daily chart:
Wave Analysis:
What is ADX?
On daily chart, we are showing Average Directional indicator that measures the strength of the trend. It seems the +Direction index (blue) and negative Directional Index (red) both have reached extreme levels and are turning. +DI and –DI measures the strength of positive or negative true range. In simple terms it helps to understand if on an average basis market is closing more up than down. It also indicates extreme or overbought zone.  As both blue and red line has reversed from extreme level it is an indication of sideways action or the uptrend is in matured stage. This is a lagging indicator and so we do not use it very often unless crucial reading is seen like currently. Previously such extreme reading was seen in October 2012 when both blue and red lines reversed and index corrected around 250 points.
In short, there is no change in our outlook as of now which is sideways to topping. Even the stocks are not providing a clear direction. Break of crucial levels shown on chart will determine the trend over short term and intensity of the movement will indicate medium term outlook.
We have been applying various indicators and techniques in conjunction with Advanced Elliott wave theory to be with market direction. Do not miss the next wave as elections are not far away and high volatility is expected in the coming days. Subscribe to The Financial Waves Short term update which includes Nifty and 3 stocks where short term trading opportunity exists. For subscription options visit Pricing Page

Thursday, March 20, 2014

Nifty continues to struggle near important channel intersection!

The below research is by Waves Strategy Advisors. For subscription to daily research report - The Financial Waves STU" visit

Nifty continued to face resistance near 6560 area. The short term movement continued to be in the range of Bollinger Bands.

Nifty daily chart 1:

Nifty 1st daily chart shows the importance of channel and why it is important to rely on this basic technique when wave counts are not clear. As we can see the channel is very well working since January 2012 and prices are now very close to the upper end of the channel. The problem of using channeling technique alone is that prices can keep on drifting higher along with trendline of the channel as period of Jan 2013 shows (highlighted). So we have to combine this technique along with an indicator – Moving average difference which has been working very well. A close observation shows that this indicator has been turning down everytime it touches 200 levels. This has happened 4 times since 2011 and this will be 5th time if it turns down again. However, one subtle behavior is that after the indicator turns down prices move back to test the recent highs but indicator forms lower highs. This gives a classical negative divergence which might not be visible on RSI or ROC. Minor blue lines on indicator reflect that. The basic assumption of technical analysis is what worked in past should work now as well. Based on that premise we think some pull back in prices is plausible towards 6450 or near 6420 but then a retest of recent highs should result into negative divergence on this indicator.

The first chart is a clear indication of why we did not turn bullish even when the new highs are made. I distinctly remember the scenario of January 2013 when a similar euphoria was seen as Nifty approached 6100. The difference being the short term pattern (wedge) was very clear then but in current scenario it is an exponential rise. Such patterns normally end with negative divergence on indicator and let us see if the same happens now as well.

Alternative scenario: We will adopt alternative scenario only once Nifty breaks above 6620 level but provided the Moving average difference breaks above 200 very decisively. Also many stocks ICICI Bank, Reliance Industries, Hindalco, reacted exactly from the resistance level mentioned in previous updates. So a true breakout happens only when everything happens in synchronization and trust me markets do not move randomly but in extremely locked step fashion. It is us who should have the capability to cope up with the market dynamics.

On 18th March morning research report - The Financial Waves short term update we mentioned the following:

The upper end of the Bollinger Bands(C) is now near 6580 level which should now be an important level to watch. This also sounds logical. Since 6562 level is tested 3 times I think it will lose its importance now and prices will probably whipsaw it by moving higher towards 6580 as per upper end of Bollinger Bands. 

Happened: On 18th March itself Nifty moved past 6562 and made an intraday high near 6575 levels and reversed back lower.

In addition to above chart the daily research shows Nifty intraday as well as daily chart with Elliott wave counts, Time cycles, RSI, Option indicators, etc. For subscription visit and select "The Financial Waves short term update". For more details write on or call on +91 22 28831358

Friday, March 14, 2014

Video of Stocks to watch for Elections 2014 by Ashish Kyal

Video of Stock ideas for forthcoming Elections in April 2014 by Ashish KyalCMT Director of Waves Strategy Advisors (
This video shows 4 picks that looks good from investment perspective. But if momentum changes and Nifty forms a top again refrain from investments in index based stocks till major index starts showing signs of revival! 

Tuesday, March 11, 2014

Nifty: Why knowing Elliott wave characteristic important for path ahead?

Nifty: Why knowing Elliott wave characteristic important for path ahead?
Elliott wave principle has a logical explanation on the way impulse wave 1 should behave. 
It is the period where wave 1 moves up slowly and steadily amidst the persisting pessimism from the ongoing bear market prior to the start. This results into selling at every level but market ignores it and rises the wall of worry. Then wave 2 retraces wave 1 by 61.8% and unless index reaches middle of wave 3 the pessimism continues. On probability terms impulse waves are seen only 20% of the times and within this 80% of the times wave 3 will be extended. This means there is less than 4% probability that wave 1 will be extended.
The above shows the logical explanation why at times when Elliott Wave counts are not clear it is imperative to know the characteristic of rise and other sentiment indicators to gauge the ongoing structure.
The below chart is published along with Weekly, daily and alternative counts in today’s morning research of “The Financial Waves short term update” a daily research report covering Nifty and stocks. In today’s report we have shown exhaustive outlook on Bank Nifty index along with NSEMidcap index as well.
Nifty 60 mins chart:
Wave Analysis:
In previous update we mentioned that “For now, it is better to avoid catching a top in current rally which is so far different from preceding rallies as there is no negative divergence on hourly charts. Next level to watch is at 6450 and close above it will continue the trend in complex corrective fashion!”
Nifty opened near 6413 with mere 12 points Gap up but the momentum then continued throughout the day with heavyweights like BHELICICI Bank, Axis Bank, Reliance Industries, LT,DLF rising by more than 5%. This helped index to reach the unchartered territory of 6525 by closing hour. Such euphoric rise in Banking heavy wrights and Reliance Industries is a rare occurrence and I do not remember last time such move was seen. Reliance Industries rose by more than 5% in almost 5 years period.
Volumes: A typical start of new trend requires a period of accumulation. This was seen during the bottom formation of 2008 – 2009 when the volumes were way above normal and was seen before January 2012 more than 1000 points rally and then again was seen in August 2013 before the rally as shown on daily chart. The current rally infact from volume perspective ……..
Alternate Expanding Triangle: An expanding triangle is a very rare pattern with spikes seen near the end of each of the legs which creates strong euphoria near their completions and each of the leg is bigger than its prior leg.
Current possibilities:  In short, prices are now approaching the strong resistance trendline of the channel and so the zone of ………. will be important as shown on 1st daily chart. ….
Do not get carried away in 3 days of euphoric rise because the underlying technicals are stating otherwise. To know what is next from here and Is this multi-month breakout for next Bull trend? Subscribe now to “The Financial Waves short term update” and get insight into what we think the pattern Indian equity markets are forming by visiting the subscription page at

Friday, March 7, 2014

Sensex - Is the up move a fool’s rally?

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In today’s morning equity report “The Financial Wave short term update” we published the following in addition to in depth analysis using momentum indicators, Elliott wave counts, etc-
We have been expecting start of next Bull trend in 2014 and has highlighted it in all of 2013 but looking at the short Elliott wave patterns and structure we have our doubts if this can be it and one final leg on downside is pending before the Bull run can start. The up move from 5980 has been corrected everytime by mere 1 day of fall which is a typical characteristic of a corrective pattern where corrections take lesser time than preceding waves. Also last 100 points of up move on Nifty has already created lot of euphoria by moving a few selective stocks up by anywhere between 5% to 8%. Bull Trend does not start with lot of euphoric rise but should be more subtle and in disguise and accompanied by strong accumulation which should be reflected in volumes which is not visible so far.
The following is published in this month’s issue of “The Financial Waves Monthly update” which forecasts medium to long term trends on Sensex, Gold, ForexBITCOINS, and lot more in its 16 pages of comprehensive report.
Sensex weekly chart is showing a very important channel which is working since 2010 onwards. The lower trendline of this channel has provided strong resistance to prices everytime index has approached near it. We can clearly see that since 2013 onwards prices are simply clinging to thistrendline and drifting higher. As long as prices do not enter in between the channel shown above the move can remain subdued and slow.
Figure 2: Sensex weekly chart

There are times when the wave structure become very complex and we have to combine it with other techniques like Time cycle, Breadth indicators, Moving average differences, etc.
Price Oscillator indicator: We are showing a Price oscillator indicator on the weekly chart. This simple Oscillator takes difference of 2 Moving averages and plots it. We think difference of Moving average provides much vial information than the single average itself. The reason being difference of average is a true indication of momentum. It measures market momentum over short term as compared to medium or long term. In the above chart we are using 20 days and 5 days Exponential Moving average. The indicator clearly reflects that momentum has been actually slowing down since October 2012. The high hit in October 2012 by the indicator is still not taken out and each of the high is on lower value. This means that the shorter moving average is not able to move away from longer Moving average giving which cannot start a strong trend on upside. Even currently the indicator is lying near value of 1 when the index is reaching near another high.
In a nutshell, …………….. The probable turning point for this move is near ……… levels and the reason why we are changing this value is based on the fact that the resistance trendlineconnecting the tops is slightly tilted on upside and with each passing month the resistance is slowly shifting upwards. A very strong ……….
Subscribe now to “The Financial waves short term update” and “The Financial Waves monthlyupdate” to view right from 60 mins, daily, weekly, monthly, charts with synchronized Elliott wave count, Time cycles, Breadth indicators, momentum, Price oscillator, RSI and much more to derive the short to long term view on Indian markets. For subscription options visit

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Wednesday, March 5, 2014

Neo wave counts on Nifty - Advanced Elliott wave

The below is the Nifty chart with Neo wave - Advanced Elliott wave counts. It seems Triangles and Diametric patterns are the most common equity markets are currently following.

Nifty daily chart - Neowave counts

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Sunday, March 2, 2014

Training you to be the Best future analyzers

Today in the era of growing economy and flourishing markets a wise investor has to keep a track and knowledge of everything that happens around him which affects the financial market. When people invest in equity and trade in this growing market they usually forget that this market has two sides, one is where the bull rules and another is where the bears loose. Both the aspects are important and to understand them you have to study them better. Keeping that need in mind Waves Strategy Advisors have offered educational services where people can study and understand technical analysis along with advanced tools which helps them trade in a better way. To know more about curriculum visit the website.