Just few weeks back everyone was talking about how fall in Crude prices is good for India and help curb inflation.
However, we have been debating this thought process since the Crude entered its 3rd wave on downside at $85. We have been constantly warning our readers and subscribers that the fall in Crude prices beyond a specific level that too within a short duration of time is not good for any economy. As this highlights the fragile nature of world manufacturing industry and inflation is just one parameter everyone is focusing on rather than paying attention to slowdown in global demand.
Now when world equity markets have started correcting people at large will then realize why sharp movements in one direction is not always beneficial even to Oil dependent country like India.
Today’s sharp selloff in Nifty simply produced a classical 2 stage negative confirmation as per Advanced Elliott wave – Neo wave. Below is a gist of today’s research report “The Financial Waves short term update” produced in morning.
Nifty 60 mins chart:
In today’s morning research report we mentioned the following:
Nifty opened positive and touched intraday high of 8445 levels during first half of the day. It came close to the 76.4% retracement level we have been mentioning since the upside move started after forming a low near 7960 levels.
Now the fall from 8627 to 7960 has taken 9 days against which the index has now consumed 12 days and retraced only near to 76.4% levels. This is keeping our existing wave counts shown on short term chart intact that the rise is only corrective in nature and the top at 8627 should remain protected. ….
The current ongoing pattern is very similar to that of the top formed in November 2010where we had a move down in 3 waves which was then retraced by nearly 76.4% rise in a clear 3 waves up move post which the downtrend resumed!
Nifty 60 mins chart shows the internal counts of ongoing correction and prices are currently in wave c of wave (b) which started from 8280 levels. The up move from 8280 to yesterday’s high of 8445 has taken two days and so a fall back below 8280 in next two days will confirm time reversal along with price as well. This will break 0-b trendline providing 1st stage negative confirmation and will also retrace the complete up move of wave c thereby providing 2nd stage negative confirmation.
In short, Nifty is moving at important juncture. Move below 8280 –8290 will resume the short term downtrend which should break previous ………. The momentum has failed to pickup after the strong Friday closing increasing the weightage of our current preferred scenario!
To know what is next from here for Indian markets and why fall in Crude prices is not helping Indian economy subscribe to “The Financial Waves short term update”along with Monthly research report to get trend analysis right from short term to long term forecasts. For subscription options visit www.wavesstrategy.com or contact us at +91 22 28831358 / +91 9920422202. Write us at helpdesk@wavesstrategy.com
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