NSEMidcap index: Applied Fibonacci ratios, identify an impulse pattern and forecast the trend!

NSE Midcap index has moved higher impulsively from the lows of 6500 since September 2013.

The entire up move has been very clearly divided in 5 waves so far unlike Nifty that has shown corrective behavior.

An impulse pattern behaves in a peculiar way and it is very easy to identify them. The forecasting and accuracy also increases during its formation. The below chart will help you understand the impulse move in NSE Midcap index along with probable price targets.

NSE Midcap Index Daily chart:

Waves Analysis:

The below excerpt is picked up from the daily research report “The Financial Waves short term update” – our flagship product that identifies the trend on Nifty, stocks and indices along with detailedElliott wave counts, applied technical analysis & crucial support & resistance levels.

As shown on above chart, prices are currently in wave 5 and wave 4 formed an irregular Flat correction pattern. The wave c of wave 4 completed near 10940 on 16^th October and since then wave 5 is ongoing. Prior Wave 3 traveled to very close approximation of 2.618 times wave 1. This adheres to the guidelines of Elliott wave theory very well.

Also we can clearly see strong alternation between primary wave 2 and wave 4, where wave 2 consumed less time compared to 4, wave 2 was a simple corrective pattern whereas wave 4 formed Irregular Flat pattern, wave 4 was more complicated compared to wave 2.

Initially we expected wave 5 to complete at the high of 12000 but looking at the slower fall post 5^thcompletion the current structure looks more probable. The ongoing wave 5 can now reach near 12100 zone which is 61.8% level of wave 1. However, as wave 3 has been extended to the extent of 2.618 there is also a high likelihood that wave 5 can truncate or form double top. The reason being lot of power is already consumed during the formation of wave 3 and so the current trend will lack the strength. This is also visible with negative divergence seen on RSI between wave 3 and wave b of 4 that touched new highs.

In short, NSE Midcap and broader market is currently moving higher in final primary wave 5 which can complete near ……….Break of 2-4 trendline will be a strong negative confirmation!

Subscribe NOW to the daily research report and see for yourself the probable upside targets for Nifty and stocks. Also see the maturity of trend from short to medium term basis. For subscription options visit http://www.wavesstrategy.com/index.php/store.html

Is Crude really headed towards sub $70? Or is it time to take a break from short positions?

Crude has been in news for many weeks now after the sharp fall from $108 mark to current levels near $80. 

Now many traders are betting that it will head below $70 exactly at the wrong time. We have our doubts and the studies are indicating otherwise.

The blame is now put on OPEC for not taking corrective steps and keeping supply under check. But we believe it is more due to reduction in demand globally rather than supply pressure. Also it is only after the sustained selloff that fundamental news start kicking in to justify the trend. For a trader it is important to know the trend before rather than betting on news which is always later!

Now see the below chart of Crude and see for yourself why we think the downfall is in matured stage:

MCX Crude daily chart:

Below is the excerpt from “The Commodity waves short term update” published on daily basis in morning.

Crude has continued to trade with loss of momentum on downside. Many of the analysts and traders have started believing that Nymex Crude is going to drift towards $70 mark. However we beg to differ and think that Crude is in matured stage of down move and reversal should happen soon on upside. There are series of positive divergences but prices are yet to confirm. Move above $85 will be strong positive confirmation that the trend has reversed on upside.

Similarly, for MCX Crude the support is now at 4900 levels. Prices are simply drifting with loss of momentum and RSI is showing strong positive divergence. This increases the odds that we can see an upside reversal from here. However, positive price confirmation will be obtained only above 5120 levels.

In short, Crude is now at crucial juncture. Break above …………

It is also important to look at the short term hourly chart along with daily chart to understand the key reversal areas. To know more subscribe now to this daily research report and see yourself where is Gold, Silver, Crude and Copper are headed from here. Most commodities are now at very important levels. Do not miss the next big trend which might be about to emerge. For more details visit the http://www.wavesstrategy.com/index.php/store.html  or Contact us at +91 22 28831358 / +91 9920422202

Sensex: Sector specific movement to continue- Economic times section of Navbharat Times

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 showed strong bounce back after making a low near 25910 levels on 17^th October. This can also be attributed to the announcement of another reform of diesel price deregulation along with outcome of Maharashtra and Haryana state elections with BJP leading in both the states. This will help the central government to put further reforms on fast track. On the day of Diwali Muhurat trading Sensex inched closer to 27000 mark whereas Nifty managed to close above psychological 8000 level.

Monitoring Global growth will be important: IMF in its latest World Economic Outlook has raised concerns about slower than expected growth in developed economies due to high debt burdens and unemployment. It will be important to keep an eye on global growth going forward along with other macro-economic factors.

High Gold and Silver imports: The imports of precious metals have sharply increased in September. This has been a concern since reduction in Crude prices has still not helped the country to reduce its current account deficit (CAD) which has widened to record high levels. The rise in Gold prices from here on can further put pressure on CAD and government will be forced to take action to keep this under check.

The results have been mixed bag so far with a few stocks like TCS, HCL that did not live upto the expectations showing sharp selloff. On the other hand Oil and Gas sector stocks like HPCL, BPCL showed good uptrend after diesel price deregulation announcement. Bank Nifty index has managed to touch new highs at 16500 levels but Infra, Power and Metal index has still not shown any meaningful recovery. To sum it up it is a mixed signal and the sector specific activity can continue unless a strong trend emerges in either direction.

Week ahead: Overall, Sensex has managed to form a positive weekly bar which is keeping the short term trend positive. On upside break above the previous high near 27350 will be crucial and on downside recent low formed near 25900 will be an important support. 100 days Simple Moving average which provides the direction of medium term trend is also near 26000 level. So for positive trend to continue this level should be protected. However, given the sharp selloff seen in a few European markets over past few weeks and concern raised by IMF it will be important to use good risk and money management strategy in case there is reversal. 

For subscription to daily & monthly research reports subscribe to "The Financial Waves short term update" by visiting http://www.wavesstrategy.com/index.php/store.html 

Wish you all a very Happy Diwali and Prosperous New Year!

Wish you all a very Happy Diwali & Prosperous New Year!

May this Diwali bring lots of GOOD LUCK and SUCCESS to you and your Family! Let the Divine Blessings shower upon your loved ones this Diwali.

Ashish Kyal, CMT

Director, Waves Strategy Advisors Pvt. Ltd.

www.wavesstrategy.com

Maruti has continued to show strong outperformance with overlapping fall & impulsive rise!

Stock specific movement has continued in Indian markets with auto major like Maruti showing strong impulsive move on upside and overlapping corrections intermittently retracing these upside moves.

Understanding the pattern of correction can help us the gauge the size and magnitude of next leg on upside. Below is the hourly chart of Maruti picked up from “The Financial Waves short term update” published in morning of 21^st October 2014.

Maruti hourly chart: as shown on 21^st October 2014

Maruti hourly chart: as of today by 11:45 am

The below article is part of the research published on 21^st October 2014

Wave Analysis:

Maruti is one of the outperformers from the index. In the above daily chart we can see that prices have hardly retraced the prior down move when Nifty has showed move from the level of 8160 to 7730 levels. The correction in the stock of Maruti is more of time correction which has arrived at the crucial levels. Currently prices are intact in upward moving blue channel. Medium term investors can trail stop towards 2800 levels which will confirm break of 50 days Exponential moving average, pivot low and important channel.

As shown in 60 mins chart, in the last trading session prices have given breakout of the pennant formation with gap up action which is positive sign. Now, an hourly close above 3020 will confirm that upside trend has started. On downside 2900 will act as an important support where channel is placed.

In short, close above 3020 will confirm start of upside trend and then move towards 3120 is possible.

Maruti showed strong performance today itself and stock has surpassed above 3120 levels. So is it right time to enter the stock now? Probably not because the risk reward is not fitting well and the indicators are in overbought state. Nevertheless, existing long positions can use trailing stop method to ride the trend…

“The Financial Waves short term update”is a daily research report which is published before equity market opens. It has short to medium term view on Nifty and three different stocks on daily basis with Applied technical analysis, Elliott wave counts, crucial levels to watch. The report is delivered directly to your mailbox and is useful for traders, investors, and students of markets who want to learn practical application of systematic market analysis! For subscription option please visit http://www.wavesstrategy.com/index.php/store.html 

Why US market – DJIA is at very crucial juncture?

An insight into US major index – DJIA - Global markets have continued to be under turmoil over past few weeks without any strong negative event.

It is prudent to look at the long term charts to understand the short term counts when prices reverse from crucial junctures. We are therefore showing the weekly chart of DJIA that represents the entire movement post 2000 onwards.

DJIA Weekly chart:

DJIA daily chart:

Wave Analysis:

As shown, prices have reversed from the important trendline resistance which has been connecting the tops of 2000 and 2007. The recent whipsaw around the same trendline and a sharp move on downside confirms the major trend might be either topping or already topped out.

The up move from 6470 is probably forming primary degree wave (X)that is internally moving in double correction on upside. An X wave connects two standard corrections together. The internal counts of this wave (X) suggest that prices have probably completed intermediate degree wave (c) of second standard correction.

5% Shifted 30 period Exponential Moving average: We have applied 30 period Exponential Moving average but shifted it by 5% which has been acting as very important support and resistance to prices since 2002 onwards. Prices are now kissing this important displaced average line and a decisive close below it will be a strong indication that the intermediate top is in place.

Series of RSI divergences: The turn in prices is accompanied by series of negative divergences on the momentum indicator which is providing secondary negative confirmation. Now a lower low and lower high formation on the weekly scale will be a strong negative indication.

Short term outlook:The daily chart of DJIA shows the rise in form of intermediate wave (c) has been Ending diagonal pattern. UK major index – FTSE has already achieved the downside projection post the breakout from the Wedge pattern. The start of wave (c) on DJIA is from 12500 in late 2012. If the wedge pattern is indeed complete than we can see a sharp selloff across the US stock market. Sharp fall in US treasury yields is also indicating flight to safety.

In short,we are keeping  a close watch on US equity markets and a breakdown in DJIA will be a first indication that we are revisiting the 2008 scenario all over again! The most important level is15350 which is the low of wave iv.

At times it is important to see the Global markets since during period of uncertainty the correlation between various asset classes increases drastically. It will be very crucial to keep an eye on DJIA togauge the overall momentum across world markets.   

For subscription to Global research report or indepth research on Indian markets visit http://www.wavesstrategy.com/index.php/store.html or Contact us at helpdesk@wavesstrategy.com, +91 28831358 / +91 9920422202

Nifty & Global Selloff: Is this the beginning of 2008 AGAIN! DEJAVU!!!

Bottom Line: Nifty broke below the previous important low and closed deeply red. An important top might be in place!

The below research is published in morning report "The Financial Waves short term update" that gives complete insight into advanced Elliott wave counts on Nifty and stocks with other basic technical analysis tools applied. For subscription visit http://www.wavesstrategy.com/index.php/store.html

Nifty weekly chart:

 Nifty daily chart:

Nifty 60 mins chart:                                                    

Wave Analysis:

Nifty finally gave away the support zone of 7815 – 7840 and closed near 7748 levels. It had flat opening in morning and entered positive territory for a while amidst strong global selloff. Prices touched an intraday high of 7894 and moved in a narrow range until 1 pm. Post that as soon as 7840 level was broken the selling pressure started increasing and break below previous pivot low at 7796 resulted into severe selloff across the board. Midcap and Smallcap indices lost 2.4% and 2.7% during final hour of trading. The structure had been similar to that of US equity index – DJIA that started the fall in an overlapping fashion but later break of crucial support intensified the pressure. A similar possibility has now opened for Nifty as well.

Medium term outlook: Weekly Time cycles has worked perfectly so far that hinted towards October being a topping pattern and then the selling pressure to intensify. This time we are showing the weekly chart since 2008 onwards. As mentioned earlier the correction that started in 2008 is still not over and ongoing in the form of a running triangle pattern. A few stocks like DLF, IDBI, ADAG group, etc has retraced almost or entire of the up move prior to elections. This has further confirmed our corrective wave labeling on the upside which is difficult to digest for a normal technician. However, Elliott wave suggests that even when the index is at new high it can still be a part of correction due to irregular behavior or running correction. The overall pattern and wave characteristic takes precedence to that of the internal counts. Running triangle pattern clearly confirms this scenario with wave [D] probably complete at the high of 8160 and currently wave [E] has started. A monthly close below previous month’s low at 7840 (that is already broken for now) will be a strong negative confirmation. If after the Global odds prices still manage to cross back above 7970 then it will only indicate few more weeks of positivity before we top out. The medium term trend has already reversed or is very near to do so!

Short term outlook: A sideways and range bound action on Nifty over past few days had kept the structure and pattern difficult to predict. During such times use of crucial support and resistance levels is the key to get the confirmation for direction of breakout. Yesterday prices broke below the previous support zone of 7815 and closed deeply negative. This indicates a downside breakout. Also the positive divergence seen on hourly chart is no longer valid since prices did not confirm.

We will come out with downside projection once we see a follow-up negative weekly close that will further hint towards start of wave [E] on downside. Short term moving average has continued to stay below 20 days average and as long as we do not see a positive crossover bias will stay negative.

Volatility on a rise: Volatility has continued to increase and this can be just a beginning. During down moves we can expect sharp deviation of prices from the mean which is the primary reason for rise in volatility. One needs to stay in direction of trend which is down as of now in case a big trend emerges and follow trailing stop method.

Nifty hourly chart shows that the current down move can be wave c or wave iii with wave b ended as a running double correction in form of w-x-y (red). A close below yesterday’s low near 7730 will break the channel on downside whereas a close above 7850 will indicate completion of c near yesterday’s low. Short term pattern has continued to be challenging given the overlapping formation and one needs to use prudent risk management level unless a clear impulsive trend emerges. For existing shorts below 7790 level use 7850 as trailing stoploss.

In short, break below 7800 confirms the negative bias and follow-up move below 7730 can intensify the selling pressure similar to that of Global markets. The correlation will increase across the asset class and global equity markets and a repetition of 2008 cannot be ruled out. A monthly negative close below 7840 will add more weightage to this scenario! Stay alert and use prudent risk and money management strategies to make the most of the trend which might just be starting!!! Move back above 7850 will indicate a false break…

For subscription to Equity, Forex, Commodity and Global research reports and advisory visit http://www.wavesstrategy.com/index.php/store.html. Contact us at +91 22 28831358 / +91 9920422202 or write to us at helpdesk@wavesstrategy.com for more information.

Nifty volatility on a rise, Time to sit tight and look at crucial levels!

Bottom Line: Nifty showed sharp reversal yesterday and touched intraday high 7972. Close above this level will indicate one final push on upside before we top out!

The below research is published in "The Financial Waves short term update" daily research report by Waves Strategy Advisors. For various subscription options visit - http://www.wavesstrategy.com/index.php/store.html

Nifty daily chart: 

​

Announcements:

“The Financial Waves Monthly Update” is now published. The current research focuses on Why we are still skeptical and not stating the current trend as start of BULL TREND and how different sectors perform during one Complete Economic Cycle. Understanding India Government Bond 10 Year yield chart. CESC exhibits good opportunity from investment perspective and long term path of the same is explained as per Elliott wave theory. Comex Silver Medium term outlook. EURUSD path ahead and It is important to see the Emerging market index in order to identify how the emerging economies are doing globally.  

Subscribe monthly research report “The Financial Waves Monthly update” by visiting http://wavesstrategy.com/index.php/store.html and see yourself the long term forecasts and world markets at a glance.

Nifty 60 mins chart:    

Wave Analysis:

Nifty had a Gap up opening near 7887 and sustained it throughout the day. This has happened after prices whipsawed around 7840 level but managed to close above it. Such scenarios at times can be challenging from trading perspective and so closing basis movement becomes important. We also published an interim update yesterday around 2.00 pm indicating that the one final push on upside is probably pending given the fact that index managed to sustain the morning Gap and the participation was seen across the board.

As shown on daily chart, prices are now exactly at the blue Moving average and a close above this average followed by break of 8030 will be an indication that the upward intermediate c wave is ongoing and the low made at 7816 was only wave b. Topping patterns are made on hopes and bottoming patterns are made on fear or panic. It takes time for hopes to dissipate and so it becomes difficult to identify patterns near important tops. It is therefore difficult to conclude with high probability that wave c of third standard correction on upside is complete or it is still ongoing. For important tops to be in place we should see sharp reversals on downside. Nifty retraced most of the prior down leg in single day and thereby failed to show sharp down move. Going by this logic it means that one final push on upside might be pending. However, it will be very crucial to see a close above 7970 levels followed by break of 8030 to confirm this scenario.

As shown on 60 mins chart, the move on downside is not impulsive and has happened in overlapping fashion indicating a-b-c correction instead of impulsive move. Prices have now closed exactly on channel resistance near 7970. For uptrend to resume close above this level will be crucial. As the participation was seen across the board but it will be too soon to conclude that the uptrend has again resumed by looking at just one day of rally. Let us see if the positivity continues in broader market even today or tomorrow for confirmation.

In short, a move back below 7840 will indicate that the complex correction on downside is still ongoing whereas close above 7970 will confirm one final push on upside is pending. It is better to wait for prices to confirm in which direction it wants to head before making a conclusive stand on wave structure!  

For subscription to daily research report visit http://www.wavesstrategy.com/index.php/store.html that has Nifty and three different stocks. Contact us at helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202

View on Sensex this week, published in Economic Times section of NBT

Sensex moving in a range awaiting fresh triggers!

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

Over past few weeks Sensex has been moving in a range of 26220 and 27350 levels and closed at 26560 in previous week. We can see good profit bookings at higher levels above 27000. This can also be a result of fair valuations that Indian equity market has arrived after the sharp rally that began in September 2013. The best performing sectors in this rally had been IT, Pharma and FMCG. These sectors have still managed to attract buyers at higher prices in expectations that the future earnings will be much better. With the start of earnings season many investors will be closely watching the results of IT major Infosys to get clues on their future guidance and it should act as short term trigger for clear trend.

RBI continued to maintain the key policy rates at higher levelsand has emphasized that they are not looking forward to cut the interest rates anytime soon. The reason being, if FED (USA) starts increasing the interest rates in 2015 this can result in short term volatility and increase the risk as short term liquidity will reduce. In India, there are some signals of easing inflation but it seems RBI will not cut interest rates unless inflation is seen below their target zone.

Sharp rally in US Dollar a concern:Another important factor which is a concern for commodities and commodity driven stocks is the sharp rally in US Dollar over basket of currencies. US Dollar has increased sharply over past few months against EURO and has still not showed any signs of reversal. This has led pressure on not only Bullions – Gold and Silver but other commodities as well.

Looking at Technical indicators: Along with fundamentals, it is very important to look at the technical indicators in order to understand the clear trend and important levels that act as crucial support and resistance. Sensex touched the high of 25375 on 16^th May 2014 after the election results were announced. Currently prices closed at 26567 in previous week. This is less than 5% increase in almost 5 months. It is an indication that the upside momentum has reduced and only specific stocks that have promising earnings delivery have attracted investors. Weekly momentum indicators are also showing some negative divergence which is a cautious signal over medium term. The long term trend still remains positive but one should not be surprised to see short to medium term correction.

Week ahead: Sensex formed a low of 26220 in the month of September 2014. This is not only a monthly low but also a quarterly low level which should act as an important support. A close below this level can be concerning over short term. On upside 27000 continues to attract profit booking. So for upside trend to emerge sustainability above 27000 will be required. As long as these levels are intact we can expect range bound movement to continue in week ahead!

For subscription to daily research reports visit http://www.wavesstrategy.com or contact us at +91 22 28831358 / +91 9920422202

IFTA: Applying Elliott Wave and Time Cycles to Understand the Trend of DJIA – U.S. Equity Market by Ashish Kyal,CMT

Below article was published in International Federation of Technical Analysts (IFTA) Newsletter in their September Issue (Click on the image for readability) Waves Strategy Advisors offer various services across Equity, Commodity, Global and Forex segment. Daily research report, Intraday/ Positional advisory, Long term forecast on Global Markets an Training on Advanced Technical Analysis concepts like Elliott Wave, Time Cycles. Attend the 2 days training workshop that will provide in-depth analysis on Advanced concepts of Elliott wave – Neo wave and how it can be combined with Time cycles. This is one of themost advanced training in technical analysis. It focuses not only on Price but also on Timewhich is an important element for any trader or investor. There are no shortcuts to Trade or Invest profitably. It comes with lot of research, psychology, objectivity, tested methods. The above study ensures increasing the probability of success while trading and also highlights the area when one should be patient and avoid taking positions. Making money is one thing but to preserve what is made is the Key to trading success!!! Register before 15th September 2014 to avail Early Bird Offer and confirm your seat today!For registration visit http://www.wavesstrategy.com/index.php/free-articles/trading-lessonsa-education/1005-training-on-neo-wave-a-hurst-time-cycles-in-mumbai.html or call us on +91 22 28831358 / +91 9920422202 or write to us at helpdesk@wavesstrategy.com