Video explaining Nifty - Elliott Wave Pattern

Video explaining Nifty - Elliott Wave Pattern. To know the daily research update and direction of Nifty along with trading strategy subscribe to "The Financial Waves short term update". For more details visit www.wavesstrategy.com

Nifty bounced back from 76.4% Fibonacci retracement at 7960, Elliott wave structure of up move crucial!

Bottom Line: Nifty continued to move higher but formed a DOJI bar on Friday. Weekly bar has still formed a negative formation.

The below research is picked up from daily report publication "The Financial Waves short term update". For subscription options visit www.wavesstrategy.com 

Nifty daily chart:

  

Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that, “In short, close above 8210 - 8215 is important to start deeper correction on upside towards 8380 level where 61.8% retracement is placed of the prior fall. Also it will be important to see the overall breadth and sustainability if Nifty has another Gap up opening!”

Nifty had another Gap up opening on Friday and touched intraday high of 8263 levels. Prices consolidated within the range of 8200 and 8260 for the rest of the day. A very important observation is that Midcap and Smallcap sectors opened strongly but later closed near the day’s low. The overall breadth was also only marginally positive. This behavior is peculiar to wave b formation which is retracing the down move from 8627 to 7960 levels.

As per weekly bar technique, for the third consecutive week prices were unable to take out the high of prior week and closed on the negative note. For weekly trend to turn positive prices have to close above 8265 which is previous week’s high by end of the current week for uptrend to continue. Nevertheless, over short term as prices have given Gap up move on Thursday and Friday the short term trend is positive.

After V shaped recovery prices tend to take important support and resistance near Bollinger Bands®. So we have applied this technique on hourly chart. The resistance as per this technique is now near 8320 which is also the previous pivot area and the support continues to be near 7960. The Bollinger Bands width has drastically increased to rise in volatility and should narrow down over next few days giving more accurate turning areas.

From wave perspective, we are expecting the current ongoing move as wave b formation which can retrace anywhere near 8370 to 8470 levels which is the 61.8% to 76.4% retracement levels. However, it will be crucial to observe if prices continue to protect the recent Gap areas. On downside as long as 8080 level is protected the upside correction can continue.

In short, the near term trend is positive for now as long as the Gap area near 8150 followed by 8080 is protected. It will be crucial to see if this rally can extend beyond 4 days. We will keep an eye on broader market and high beta stocks for more clues on the overall strength.

Subscribe to the Monthly and Short term research reports “The Financial Waves” and get detailed insight into the crucial levels along with Elliott wave counts, applied technical studies and much more, Speak with our research desk for any doubts! Get in touch with us at   helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202. Visit www.wavesstrategy.com

Nifty: How applying Time cycles, Indicators and Elliott wave helped us capture the top?

In our monthly research report “The Financial Waves Monthly update” we have warned our subscribers exactly at the time it was needed most. 

It takes lot of courage and belief in the techniques you follow to stand against the crowd when the euphoria is at its peak.

Go ahead and read below the various different techniques we applied that all pointed out that the uptrend in Indian equity markets and Nifty was a “risky affair”and not worth the drawdown which might happen…

Figure 1:Nifty weekly chart

Happened:

Following is a part of research report published in our “The Financial Waves short term update”Read yourself why we turned bearish at the time when the majority had been bullish exactly at wrong time!

Indian markets have continued to touch new highs in the month of November. The high made in November was at 8617 and December also started on positive note with prices touching 8627 on 4^thDecember. November was more of an upside drifting movement with the trending move not lasting for more than two days even on upside. There has been lot of euphoria being created every time prices touches new highs but it is crucial to also acknowledge the fact that everytime a new high istouched the broader market has failed to confirm.

Advance Decline line:The best indicator to measure how the broader market has been performing is the Advance decline line. (shown in actual research report) above shows the red line which is the AD line. It has been constantly forming lower highs and lower lows and in November as well there has been a sharp down move.  AD line touched the level of -2000 which was previously seen in mid of May. So this up move which has been on lot of euphoria and optimism is not supported by the broader market.

Figure 1 shows Nifty weekly chart along with 84 weeks Time cycles.This cycle is a part of Hurst cycle itself shown previously but only on a broader frame. Any correction can either happen in sideways formation or downside (assuming prior trend is on upside). The correction seen from in 2008 was sharply on downside and the low was formed near the cycle low date. The next correction was in sideways formation as prices simply oscillated within a range from October 2009 to May 2010. The next set of correction in 2011 was again on downside followed by sideways correction in 2013. If the pattern of alternate type of correction between sideways to downside is valid and still working then we should indeed see a downside correction going forward.

Monthly Bar technique: Now let us look at the Monthly bar technique to understand the crucial support zones. …..

Commodity crisis: The current research is focusing on the commodity markets and global commodity stocks given the fact that this time the risk has drastically increased for companies or stocks that trade in commodities and even for commodity producing countries. A sharp rise or fall results into eventualities that are difficult to predict beforehand and looks obvious in hindsight. Sharp fall in Crude Oil prices along with commodity producing companies worldwide is hinting towards the increased risk in this asset class. A strong trend will ignore the actions of government or decision makers and we have seen the example of 2008. If Crude prices continue to strongly trend on downside, even the output cut by OPEC will be futile in changing the trend of commodity which will then put lot of pressure on companies directly or indirectly linked with production or refinement of Crude oil.

In a nutshell, looking at the overall breadth, momentum and sector participation we continue to look at the current uptrend as a risky affair…

In our short term research report on 8^th December 2014- In short, Indian markets continue to trade at crucial levels and a trending move is due now. It is better to await either a close below 8500 followed by 8430 or above 8627 which is the spike high for confirming the direction of trend.Indicators and other methods have been showing absolute loss of momentum but it is prudent to wait for prices to confirm which it should in this week!

In our short term research report on 9^th December 2014- In short, lower highs lower lows formation on short term chart, bar technique and Elliott wave theory suggest weakness to prevail in Nifty. On upside as long as 8590 followed by 8627 is intact trend will remain bearish. Close below 8430-8420 levels will be important to continue downside correction.

So if anyone have doubts whether the current fall was predictable amidst the optimism and euphoria using objective techniques the above research reports are much more than the evidence to prove the validity of technical studies and Elliott wave theory we have been following!

Nifty has broken below all important supports but is this right time to enter fresh short positions? We do not think so as Risk – Reward is not favorable. So what should be Trading or Investment strategy?

Subscribe to the Monthly and Short term research reports “The Financial Waves” and get detailed insight into the crucial levels along with Elliott wave counts, applied technical studies and much more, Speak with our research desk for any doubts! I am conducting a 2 days online training course on Elliott wave and will discuss various methods used for catching the recent top. To attend the training get in touch with us at   helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202. Visit www.wavesstrategy.com

Why we have been bearish on Indian Equity markets when literally everyone turned bullish exactly at wrong time!

Why we have been bearish on Indian Equity markets when literally everyone turned bullish exactly at wrong time!

For more details please visit www.wavesstrategy.com 

Nifty - A bigger trend is about to reverse by Ashish Kyal on Zee Business

Nifty - A bigger trend is about to reverse to downside by Ashish Kyal on Zee Business. Each of the technical indicators aligned together which helped us to capture a perfect top on Indian Equity markets!

Everyone has been talking about selloff in Crude Oil beneficial to reduce Inflation but people are forgetting other side of the equation i.e. the strong sell off in Commodity prices is indicating extreme weak Global demand which will adversely impact India...

For subscription to daily research reports and advisory visit www.wavesstrategy.com

Nifty reversed exactly as expected from channel resistance. An Elliott wave perspective!

Nifty showed strong reversal exactly from the channel resistance we have been showing for many months! Short term moving averages are decisively broken!

                           

Nifty daily chart:

Announcements:

Distance learning: Online Training on Elliott wave will be conducted by Ashish Kyal, CMT on 18^th and 19^th of December 2014. The telecast will be via Google Hangouts on air.

For registrations, get in touch with us at helpdesk@wavesstrategy.com or call us on +91 22 28831358 / +91 9920422202.

Nifty 60 mins chart:

Wave Analysis:

Nifty formed a strong reversal bar in previous week and broke the important support levels of 8430 and even 8290. It seems the strong uptrend has terminated after forming an Ending diagonal pattern at the top of 8627 which was with an exhaustion gap. The same day itself we mentioned about a “key reversal day” possibility and Nifty has continued to move sharply lower after that. 

In the recent monthly update itself we have shown medium term time cycles and highlighted how the current uptrend has been a “risky affair” for fresh longs to be entered along with key focus on commodity and commodity related stocks that can be worse hit during the down fall. In past few days of selloff Metals have continued to be one of the strong underperformers.

On a weekly basis, prices have made Evening star pattern which is a classic reversal pattern as per candlestick technique. One single weekly bar has retraced prior 5 weekly bars completely. This is also one of the strongest negative weekly bar from prior week’s high since the rally started from 5118 in August 2013. The reason for emphasizing on the weekly bar intensity is to highlight the magnitude of reversal even when interest sensitive sectors like Banking has managed to show resilience!

From sectors perspective, apart from Pharma, all the sectors closed in red territory. Bank nifty is moving in sideways action post the selloff from 18880 to 18180. Now, move below 18180 will make lower high lower lows formation and suggest that top has been made in Bank Nifty. On upside 18600 will act as an important resistance where 61.8% retracement of the prior fall is placed. In the evening of Friday IIP data for the month of October and CPI data for the month of November has been released. IIP for the month of October has slipped to 3 years low of -4.2 % against expectation of 2.1%. Whereas CPI has cooled to 4.3 % against the expectation of 4.4%.  Now, looking at the price structure of Nifty there is high likelihood that market will react negatively and current downtrend will continue further.

As shown in daily chart, we continue to think that important top has been made at the level of 8627 levels as post that prices have been showing impulsive down move. As per wave perspective, there is high probability that intermediate wave z of Complex correction pattern which started in the month of August 2014 is complete at 8627 levels and next leg on downside from medium term perspective has started. Prices continue to follow bar technique very well and not taking out the high of prior bar. As long as this structure remains intact trend will remain bearish.

It is prudent to avoid catching a low in the current fall and we have seen the waves extended during the fall of Crude.Existing short positions should follow trailing stop method and avoid catching a low in this impulsive down move. Use 8350 as crucial risk management level.

In short, the trend will remain negative as long as 8350 is protected on upside. Move below 61.8% of the prior up move which is near 8080 is going to be crucial to further confirm start of a higher degree downtrend!

Subscribe now for the daily research report "The Financial Waves short term update" and see yourself why Indian markets are at very crucial juncture. The daily morning research will give insight in stocks and other indices as well. For subscription options visit http://www.wavesstrategy.com/index.php/store.html  

Sensex: Break above 28800 is important to resume the uptrend! 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 has continued to form new monthly highs and touched the level of 28822 by end of November 2014. As long as prices manage to protect the low of prior month on closing basis the medium term trend will remain positive. November month did not see any strong momentum. Currently prices closed at 28458 which is only 45 points above the level seen in start of November. This shows that some strength is reducing on upside and one should invest only in selective stocks with lower “Price to Earning” multiples and good management.

NSE Advance decline line is a simple technical indicator which shows the overall breadth of the market. Even when Sensex is touching new highs this indicator is moving lower indicating more number of stocks were closing negative as compared to advancing stocks. This is known as negative divergence and it shows only selective number of stocks is taking index higher which are not a healthy sign.

RBI credit policy: RBI kept the key policy rates including repo rate unchanged in the meeting held on2^nd December 2014. RBI governor Raghuram Rajan said change in monetary policy stance now would be premature, adding RBI may change stance in early 2015 if inflation falls to 6 percent. This shows that RBI focus still remains on curbing down inflation first even if the overall economic growth might be slow.

Indian Rupee has continued to show relative outperformance since September 2013. Even when US Dollar has rallied sharply over past few months USDINR has managed to trade within the range and protected 63 levels on upside. Indian Rupee has been one of the best performing Asian currencies so far. The important support on USDINR is now at 59.50 and resistance is near 63.Break of either of these levels will start a strong trending move in that direction

Commodity prices: Commodity prices have continued to correct over past few months. Crude Oil touched the lowest level seen previously during 2009. This will help to reduce the pressure on India import bills. However, falling Crude prices is more driven by reduction in Global demand. This will put pressure on companies involved in production, exploration and refinement of Crude oil like Cairn India,Aban offshore.

Week ahead: In a nutshell, looking at the overall breadth, momentum and sector participation we think that the risk has increased for fresh investments at current levels. However, for change of trend there has been no price confirmation and unless we see a close below 27700 levels the medium term trend will remain positive. Another important technical indicator that can be used to understand the direction of market is 10 weeks Moving average. The support as per this average is near 27700 on downside. In current week, move above November high near 28800 is important for uptrend to resume with support of 27700!

Nifty - Key reversal day and at inflexion zone!

The below research was published today morning before equity markets opened. For subscription to "The Financial Waves short term update" report on daily basis visit http://www.wavesstrategy.com/index.php/store.html  

Bottom Line: Nifty had a strong Gap up opening supported by ITC but prices gave away entire gain in same hour and filled the Gap.

Nifty daily chart: 

Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that “In short, the trend for Nifty is going to be sideways and move above 8560 is important for positive trend to resume. Only a close below 8430 will indicate weakness and deeper retracement. The size of bar in either direction will be important to observe!” 

Nifty had a very interesting movement yesterday. Prices had a Gap up opening and immediately made a high of 8627 in the form of a spike and reversed sharply in the same hour touching a low of 8526 which is exact 100 points from the top. Spikes at times provide very crucial support and resistance levels. The high made at 8627 is now going to act as very crucial upside resistance and unless we see a close above this level the short term trend will remain sideways. FMCG sector was top gainer followed by Banking sector that managed to retest the morning highs.

As shown on hourly chart, there is a possibility that the wave (v) we have been expecting on upside might have completed at yesterday’s high itself. However, prices have so far not breached the support on downside. Normally such sharp movement is also termed as key reversal day if the follow-up action confirms it. It is better to wait for negative confirmation atleast below 8500 to confirm this key reversal bar. Normally it should be associated with high volumes which were not seen yesterday. Nevertheless, a close below 8500 followed by 8430 will confirm that an important top is formed. For now it is prudent to wait for break of levels either below 8627 or 8500.

Alternate possibility: The reason for showing alternate possibility is that wave v of c has now consumed lot of time compared to previous impulse up moves. So there is a possibility that the entire up move is in the form of double corrective pattern from the lows of 7730 and now prices are in second correction which is forming a rare expanding triangle pattern. A move above 8627 with increase momentum will raise the odds that these alternate counts are under play and higher levels can be seen towards the upper blue channel line.

In short, yesterday was an important movement from technical perspective. We have to wait either 8500 to break for negativity or 8627 to break for resumption of uptrend. Such range bound movement can continue to be frustrating but as highlighted earlier prices cannot continue in trendless manner for very long. A trend has to emerge soon!

Subscribe now for the daily research report "The Financial Waves short term update" and see yourself why Indian markets are at very crucial juncture. The daily morning research will give insight in stocks and other indices as well. For subscription options visit http://www.wavesstrategy.com/index.php/store.html 

Want to learn Elliott wave but Distance is a problem? Elliott Wave Live Webinar is here!

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Learn from anywhere you want. 

One of the most common requests we get from subscribers is that how can they learn to look at a charts and find opportunities for themselves?           

Our online course on Elliott Wave will guide you how to identify and trading opportunities.

Whether you are Intraday or Positional trader or investor investing 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.

Register yourself for the online training session and learn the practical way of applying Elliott wave analysis from the convenience of your place.

Join US for the 2 days training webinar to be held on 18^th & 19^th December 2014, Time: 7 pm to 10 pm on Elliott wave combined together with Technical Tools like Channels, Fibonacci, etc  – A powerful tool to analyze markets using  Elliott wave patterns – A complete different way to look at market behavior and  trading!!!

What more?

The training will be made available for the attendees for two days after the session so that they can go through the fundamental study of Elliott wave again and again unless the concepts in engraved in the mind. Also get 1 week FREE access to the Equity research report after the course to see how practically we will be applying it.

Also if you get disconnected during the session you will have the freedom to go through the recording at your own pace. So we are ensuring you do not miss out on any part of the learning!

About Speaker:

Course conducted by  - 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)

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Nifty: Money Flow index warning sign! Price confirmation still awaited!

Bottom Line: Mr. Rajan continued to surprise the Bond traders by keeping rates unchanged despite Bond yields easing!

Nifty daily chart:

 Nifty 60 mins chart:

Wave Analysis:

Mr. Rajan continued to act stringent to curb inflation despite the peer pressure and kept the key rates unchanged. The bond trader was caught off guard as the easing bond yields did not help in rate cuts. Since Mr. Rajan has taken over the bond traders are continued to be surprised. Trust me once we see fall in equity prices, RBI will be forced to take steps cutting down interest rates. As falling equity prices is a mirror of how economy is going to perform few months down the line. Looking at current scenario there is a possibility of first rate cut to happen in February 2015.

As soon as the policy decision was announced, Nifty entered into green territory atleast momentarily. This only showed markets have been waiting for news irrespective whether there will be rate cut or not. The index made a low of 8504 and traded in the range of 8540 and 8510 for most part of the day.

An interesting observation is that during the entire up trend from 7723 to recent highs there have been maximum of 2 consecutive red bars formation. Infact, in the entire up move from 5960 made in February there has been only a few times when there were consecutive 3 red bars and each time this resulted into increase volatility or deeper retracement either in terms of price or time. So far prices have formed 2 red bars and it will be crucial to observe whether Nifty can manage to close above previous close today or not.

Money Flow index measures volume along with price momentum. It indicates if money is flowing in or out of the index. It essentially a volume weighted momentum indicator. As can be seen on daily chart there is a strong negative divergence when this indicator is making a lower low against prices making new highs. We have highlighted previous such instances that resulted into atleast temporary halt in uptrend if not a strong downside correction. A break below 8460 is important for deeper downside retracement. However, it will be crucial to watch the 30 levels on Money flow index since everytime it reached there, prices bounced back on upside. First thing first, it will be crucial to observe if Nifty can manage to protect the level of 8460 and bounces back on upside in form of wave (v) of v of c. This wave counts will remain valid as long as 8670 is not taken out on upside else we will be forced to end wave (ii) of v at yesterday’s low in form of irregular Flat correction.

In short, Nifty has continued to trade in a challenging environment and no clear trending direction. Move below 8460 followed by 8430 will be bearish whereas close above 8560 is necessary for positive trend to resume!

Subscribe now for the daily research report "The Financial Waves short term update" and see yourself why Indian markets are at very crucial juncture. The daily morning research will give insight in stocks and other indices as well. For subscription options visit http://www.wavesstrategy.com/index.php/store.html 

MCX Gold managed to protect magical 25000 yet again! Upside reversal despite Swiss outcome

Strong negative news resulted into sharp reversal in Precious metals, Base metals and Energy prices in opposite direction.

Economic Times:“Gold prices tumbled on Monday after Swiss voters overwhelmingly rejected proposals to boost gold reserves in a referendum, joining a broad rout in commodities that sent copper and oil prices to four- and five-year lows.” 

It is therefore prudent not to trade based on news as you can be amongst the majority entering in wrong direction exactly at the wrong time.

Now below is the analysis on Gold using objective methods - 

MCX Gold Continuous Daily chart:                                                                                                            

Wave Analysis

Below is a brief excerpt picked up from “The Commodity waves” research report published daily before market opens.

MCX Gold started the day on negative note. Prices moved lower and exceeded the level of even 25500 on downside. However, there was sharp reversal during later part of the day across the bullions and base metals.

Important news comes near the crucial lows or tops. The news of Swiss reject to hold more Gold resulted into a sharp down move but only temporarily and the reversal happened equally hard.Such negative news and reversals usually can result into a very crucial low formation.However, it is too soon to conclude that and we need more price action along with higher highs and higher lows formation to confirm that Gold has indeed managed to protect the magical number of 25000 yet again!

Now looking at the short term wave counts (shown in actual report to subscribers)

During such times when an asset moves against the expected news it provides vital technical information to us. Gold has continued to protect 25000 mark for many months now. It has reversed from the crucial zone but for short term trading it is prudent to look at important support and resistance levels to get good trade setup. Subscribe to “The Commodity waves” research report and get insight into Gold, Silver, Crude, Copper and intermittently on Lead, Zinc, Natural Gas, etc. Or directly get intraday / positional calls on Yahoo messenger or via sms by subscribing to our Commodity advisory service with FREE research reports. Simply visit http://www.wavesstrategy.com/index.php/store.html for subscription options.