Nifty 49 daysTime cycles along with Elliott wave counts! Prices approaching crucial zone yet AGAIN!

The rise in Indian markets have been euphoric so far but, we are not buying into the theory of unprecedented gain and figures above 9500 ++ levels. The below article gives a brief overview on why it is time to stay alert and not complacent like majority. It eventually pays to not get carried away with the crowd but the emotional pressure can be enormous of not missing out the rally. However, markets are here to stay and so do wrong perceptions during major turning points. But it takes an objective technique with proven and time tested methods, belief, to stay alone when everyone is on another side.

We do not want to come in way of this euphoric rise but the Case in point is it is time to leverage less, book profits rather than start fresh investments when things look over-stretched. Various indicators have again started to align together which do not happen quite often.

Read the below research is picked up from daily report “The Financial Waves short term update”

Bottom Line: Nifty approaching close to 49 days Time cycle along with important channel line. Nevertheless, short term trend is positive with support of 8570!

Nifty daily chart:

Wave Analysis:

In previous update we mentioned that, “In short, move above 8570 will continue the upside trend. On downside 8450 is the immediate support. 5 days Exponential Moving average is also placed near 8450 level which acts as a proxy for short term trend!”

Nifty had another Gap up opening of nearly 25 points and sustained in green zone throughout the day. The buying pressure intensified post 1 pm and the index managed to touch life time highs near 8708 levels. This time the major gainers apart from banking stocks were Metal stocks like SSLT, Tatasteel,Hindalco along with Reliance Industries. These stocks have so far not participated in the up move and are finally showing some positive attempt. It will be crucial to observe if the underperforming sector can now contribute to upside index movement further from here. For now follow the trailing stop method and bar technique with stop of ……. Which is also the level above which there was channel breakout and pick up in momentum. So now this level is crucial and should act as good support.

49 days Time cycle: We have been applying this Time cycle for many months now and it has worked very well in indicating if the trend is near reversal or is in matured stage of up move. We can see that over past two times the top was formed not exactly on the cycle day but the momentum reduced after that and prices started showing distribution pattern. The cycle is again due on …. January and it will be crucial to observe if we see a top formation or few days of distribution with loss of momentum post …January.

Triangle pattern: Prices have continued to rally and touched new highs as required by running Triangle possibility. The problem with this pattern is in forecasting the last leg as it does not necessarily follow the Fibonacci relationships. Nevertheless, the projection zone which should act as strong resistance is near ……levels which also coincide with strong channel resistance shown by black trendline.

Unlike others, we will avoid getting extremely bullish for projections above 9500levels given the fact that we are approaching close to the channel resistance that has acted very well post Election results, 49 days Time cycle in near vicinity that resulted in sharp reversals in past andatleast loss of momentum over past two times, RSI has still not touched above 80 to void the daily negative divergences valid so far.

In short, continue to use reactive method with trend following system i.e. to stay positive unless we see close below ………..Also stay alert and not complacent like majority because many things are going to align together over next few days in similar way we previously highlighted in November 2014 post which there was a fall from 8627 to 7960 levels!

It is time to keep monitoring the price action on daily basis along with short term charts to understand the reversal areas and if the supports are protected or not. Subscribe NOW to the daily research report“The Financial Waves short term update”and get insights into the objective way of looking at markets rather than guessing with majority of crowd for 9500 ++ levels! For subscription options visit Pricing Page or contact us at helpdesk@wavesstrategy.com/ +91 22 28831358, +91 9920422202.