Nifty: Applying Dow Theory along with Elliott wave for trend confirmation!

Dow theory is the building block of technical analysis.

This theory has helped technicians for decades to understand the major trend of the market / index or stocks. Many Elliotticians do the blunder of giving up the most basic and important technique which helps us to stay objective at times when the forecasting tool like Elliott wave might give a few other probable scenarios. A combination of both of this technique is a lethal tool one can use and imagine when you combine this along with time cycles and momentum indicators to time the market! Trust me it gives a thrilling experience.

One such experience we had while catching a top at 9119 and later near 8845 levels. We have our records that speaks for itself along with various technical studies that helped us to capture the important tops weeks before!

Bottom Line: Nifty closed below 200 days MA will now be the key point of discussion across media forgetting the fact that the reversal actually happened near 8845 and now indicators are in oversold state!

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that “In short, Nifty has arrived at important juncture. Hourly close below 8250 will resume the downtrend with size of the bar will be important to observe whereas for any positivity move above 8370 will be necessary.”

Nifty had a minor positive opening but prices entered into red territory immediately and selling pressure intensified during the day. The intraday movement has been overlapping but the overall trend will continue to be negative as long as prices do not take out the high of previous day which is at 8335 levels.

Yesterday’s movement has taken out 200 days Simple Moving average which is a standard benchmark most of the analysts uses. As mentioned earlier a strong momentum below this average will further extend this current downtrend. Also now the bearish news will start floating across when the indicators have entered into oversold state and the fall of nearly 650 points has already happened. Case in point: It is better to use objective techniques mentioned above which helped us to capture the top near 8770 levels rather than getting carried away now with the news.

Nifty closed near the day’s low and the advanced decline ratio continued to be very poor with 215 advances against 1243 declines. There has been no bounce back in high beta sectors that was outperforming before and now shows drastic underperformance. So it is prudent to avoid catching a low and close above previous bar high will be first sign of reversal.

Prices have now taken out the previous rise in faster time and for the first time since August 2013 we are seeing very decisive lower highs and lower lows formation. This is the reason we are able to draw a clear downward sloping trend channel - the most basic and important concept of technical analysis that helps us to identify important trend changing scenarios over medium term. So it looks the overall market dynamics are changing from positive to negative and we have entered into sell on rallies strategy rather than buying on dips.

Over short term, as shown on 60 mins chart, the sharp rise towards 8505 was only wave x and the next set of downside correction has started. As long as the 8335 which is previous day’s high is intact the trend will remain negative. Nevertheless, the best of the downside move might be over as now we are approaching close to medium term channel support (shown on daily chart) which very few are looking at as the focus is shifted to 200 days MA. So the zone of 8020 to 8100 can be an important support area post which we should start seeing the upside retracement of the fall.

In a nutshell, faster move below previous low of 8270 confirms the reversal in medium term trend as per Advanced Elliott wave and as per basic and most important concept of technical analysis - DOW theory the upward trend started from 5118 in August 2013 is complete! Over short term use 8335 as trailing stop for short positions with important support now near 8020 – 8100 zone!

To ride the next wave subscribe to “The Financial Waves Short Term Update” which covers Nifty and 3 stocks with short term trading opportunity. For more information visit Pricing page

How to capture the moves in Banking stocks applying Elliott wave theory and Fibonacci ratios?

Trading is simple if we use objective tools to trade the market.

“The Financial Waves Short Term Update” covers research on Nifty and 3 stocks with in-depth analysis. We have been using basic technical tools along with Elliott wave theory to ride the short to medium term trend. Recently we were able to capture the trend of SBI and the part of the same is shown below:   

SBI 60 mins chart: (Anticipated in the morning of 7^th April 2015)

SBI 60 mins chart: (Happened on 13^th April 2015)

(Part of research published in the morning of 7^th April 2015)

Waves Analysis:

As shown in 60 mins chart, prices have decisively broken the black downward moving channel and has made higher high higher low formation. This suggests that upside retracement of the prior down move has started. Now, as long as 263 level is intact on downside short term outlook for this stock will remain positive. However given the RBI Monetary policy today, one should trade with strict risk management and today’s closing will be important.

In short, with the support of 263 level short term outlook is positive for SBI. On upside prices are expected to move towards 285 level where channel resistance along with 50% retracement is placed of the prior down move.

Happened:  protecting the support of 263 level, prices moved higher and made a high at 294.90 levels on 17^th April 2015. Now, what should be the trading strategy?

Subscribe to “The Financial Waves Short Term Update” and for more information visit Pricing page

Forecasting the path of Nifty using Advanced Elliott Wave and Time Cycles!!!

The recent down move in Indian Equity Markets may have surprised many of the traders and investors as Nifty lost more than 550 points in last 6 trading sessions.

However this move we were expecting a month back.

In the end of March 2015 Indian Equity market were moving lower and made a low at 8270 level. This may have turned traders to bearish exactly at the wrong time. At the same time we published the following path with the help of Advanced Elliott wave and Time cycles! See yourself the below chart taken from “The Financial Waves Short Term chart”.

Nifty daily chart: (Anticipated in the morning of 27^th March 2015)

Nifty daily chart: (happened till 21^st April 2015)

(Part of research published in the morning of 27^th March 2015)

“The Elliott wave structure looks to have changed to some extent where we are seeing a triangular formation rather than Diametric. In advanced concepts of Neo wave this triangle is known as Extracting triangle where the size of up move reduces and that of down move increases. The current down move has now become the biggest leg in the entire pattern which can be wave (d) of this triangle and now we should see an up push from here towards 8800 levels where wave (e) will be 76.4% of wave (c). 8800 is also the level of 61.8% retracement of the entire fall from near 9100. This level is also previous x wave which tends to provide good resistance to prices. However, first thing first, as of now we have not seen a positive close above previous bar high which is crucial sign for reversal in trend.”

Capturing the recent short term low!!!

Nifty 60 mins chart: (capturing the short term low)

(Part of research published in the morning of 22^nd April 2015)

“As per advanced Elliott wave – Neo wave, alternations are very important between waves ii and iv. Also out of 6 touch points not more than 4 points should lie on the channel else the structure becomes non – impulsive. This is the reason why we think the fall from 8445 is in double corrective formation and wave c of second correction will reach towards 8270 where it will achieve equality with wave a. Post that there can be another…….”

From the above research we can see that how we were able to capture the crucial turning point over past few months. As per all this techniques Indian Equity Markets has been trading at extremely crucial point. To ride the next wave subscribe to “The Financial Waves Short Term Update” which covers Nifty and 3 stocks with short term trading opportunity. For more information visit Pricing page

How to trade Nifty on intraday basis?

Trading becomes interesting with rise in volatility provided you are placed in right direction of the trend.

It takes intense research and analysis before executing trades. If you have time constraint and do not want to apply advanced objective techniques yourself leave it upto the experts who are looking and measuring the pulse of the market on daily basis.

The below shows past few Nifty trading strategies we have given in our daily research report “The Financial Waves Trading Update”

Anticipated the fall since 16^th April 2015:

Happened so far:  

On 16^th April before markets opened following was the trading strategy:

“For today, short positions can be created on move below 8720 with 8770 as stop and target of 8650”

Happened: Nifty moved exactly as expected and touched the intraday low near 8640 levels.

Trading Strategy on 17^th April 2015: “For today, short positions can be created on move below 8650 with 8710 as stop and target of 8580. Avoid creating long positions for today."

Happened: Nifty broke below 8650 and rushed towards the target area.

Trading Strategy on 20^th April 2015: “For today, short positions can be created on move below 8590 with 8640 as stop and target of 8520. Avoid creating long positions."

Happened: Nifty moved exactly as expected and moved even below the target area.

We do not say that the strategy given before the markets might work every time but the accuracy of around 70% to 80% should also suffice to have a profitable P&L on an average basis. A very big trend might. Do not get carried away that it is only buy on dips market probably it is time to evaluate and change the stand!

Subscribe to the daily Equity and Nifty research report and get insights into most objective techniques you might have come across to assist you in your trading and forming suitable strategies. For subscription options visit the “Pricing Page”

Trading Nifty using indicators – Elliott wave, MACD, Time cycles, Channels! Catching reversals!

Nifty has given away more than 400 points in less than 4 days.

This might be a surprise to the short term traders or investors but using the objective techniques of Elliott wave, MACD, Channels on the short term charts can help you capture key reversal areas.

Many might argue and come out with fundamental justifications after the fall has happened. But is it possible to predict the movement before it even started? The answer is definitely “YES” with a given degree of probability!

We have published article few days back showing our prediction of 27^th March that clearly showed the rally towards 8800 and then sharp fall from there. You can scroll few days back and check this article. Now below we are showing the short term techniques we used to time the market movement! Read below if you want to get more thrilled!!!

Nifty 60 mins chart: Anticipated on 16^th April 2015 (published in morning research report)

Happened: closing of 20th April 2015

Wave Analysis:

The following was published on 16^th April 2015 –

“Nifty had sharp reversal at 2:50 pm and lost nearly 100 points in nearly 10 minutes. We have been clearly warning about such moves which should not be a surprise to our subscribers. The major reason being that in the entire up move from 8270 levels there has been sharp reversals on downside and also the wave counts internally was suggesting that the rally is near completion. Also final leg wave c of second correction formed a wedge shaped – Ending diagonal pattern that warrants such sharp reversal.

We showed the path of Nifty on 27^th March morning when prices closed near the day’s low of 8270 levels. It takes lot of belief in the objective techniques to mark the reversal on upside from there which clearly showed an up move till 8800 - 8830 levels which will complete wave (e) and then a move back on downside.Happened: Nifty has followed this path to the point along with time as well and reversed on the 49^th day cycle.

Word of caution: If Nifty is indeed starting a major leg on downside we should see some serious selloff from here over next few weeks. In short, move below 8700 will confirm negative outlook on Nifty with resistance of 8830 on upside preferably on closing basis. Volatility can be high from here and existing short positions should now use 8830 as stoploss and follow trailing stop method in case this move develops into a bigger selloff from here!”

The following was published on 17th April 2015 –

“Over short term, Nifty has taken out the important support of 8680 – 8700 as well on intraday basis. If this is indeed start of important trend then the top at 8800 should remain protected. So existing short positions should now trail stop towards 8800 and ride the trend as long as it lasts.

Short term MACD indicator shown on hourly chart has also move decisively below the signal line along with negative divergence with prices. Such minor negative divergences which are very important might be missed out on RSI as it is a bounded and range bound signal. It is therefore important to use one bounded like RSI and one non bounded indicator like MACD to gauge the internal strength and momentum. In short, trend for Nifty has reversed & one should avoid catching a low in this down move. The trend can be fast and sharp.”

Happened: Nifty followed the path exactly as expected. It is only because of the belief in the objective techniques mentioned above that we are able to capture the entire down move so far. Since 27th March 2015 we have been able to capture nearly 500 points on upside on Nifty and now nearly 400 points down fall and counting….

What is next from here? You will have to subscribe for that to the daily equity research report “The Financial Waves short term update”. Visit Pricing page for subscription options and get insight into Nifty along with periodic update on Bank Nifty and three different stocks provide good short term trading opportunities. Trust me, this can be the best investment you have made so far!

Now post your charts with Technical Study and start the discussion on our Discussion Forum Page and get it answered by our experts. To post your chart now visithttp://www.wavesstrategy.com/Discussion/Discussions.aspx?type=start Call us on +91 9920422202/ +91 22 28831358 for any other details

Nifty Time Cycles, Extracting Triangle Neo wave pattern helped us to catch yet another REVERSAL!

Indian equity market has currently shown sharp reversal on downside.

Is this a start of major downtrend? If yes then where would Nifty head itself in upcoming sessions? In order to get answers of all your questions subscribe to “The Financial Waves short term update” which covers Nifty along with three stocks applying Elliott wave theory along with basic technical tools.

We have been able to capture the entire move of Nifty right from the top of 9119 to the lows of 8270, then again to the high of 8840 from where prices have reversed back again. 

See yourself and do not guess the reasons we have given and the path we showed more than two weeks back. It takes strong belief in the techniques one follows to be against the crowd during major turning juncture!

Nifty daily chart: 

Anticipated on 27^th March 2015 even before there was not a single positive bar

 Nifty daily chart: (Happened so far)

Elliott Wave Analysis: The following was published in today’s morning research report to our paid subscribers of“The Financial Waves short term update”

In previous update we mentioned that “In short, Nifty is in matured stage of up move and sudden reversal should not be a surprise. However, such sudden reversal should break 8700 and close below it….Next 2 to 3 days are going to be very crucial!”

Nifty had sharp reversal at 2:50 pm and lost nearly 100 points in nearly 10 minutes. We have been clearly warning about such moves which should not be a surprise to our subscribers. The major reason being that in the entire up move from 8270 levels there has been sharp reversals on downside and also the wave counts internally was suggesting that the rally is near completion. Also final leg wave c of second correction formed a wedge shaped – Ending diagonal pattern that warrants such sharp reversal. Nevertheless, ……

We showed the path of Nifty on 27^th March 2015 morning when prices closed near the day’s low of 8270levels. It takes lot of belief in the objective techniques to mark the reversal on upside from there which clearly showed an up move till 8800 - 8830 levels which will complete wave … and then a move back on downside.Happened: Nifty has followed this path to the point along with time as well and reversed on the 49^th day cycle.

Word of caution: ……..(shown in actual report)

As shown on hourly chart, Nifty has broken below the channel support and 20 periods EMA which was providing good support. Prices are now lying on lower end of the Bollinger bands and a close below ………. will result into negative close below it. Also if someone is placed on short side should now follow trailing stop of…………

Subscribe now and get your daily copy of Nifty and 3 stocks analysis before market opens. To subscribe visit http://www.wavesstrategy.com/PriceNew.aspx or write to us on helpdesk@wavesstrategy.com

Now post your charts with Technical Study and start the discussion on our Discussion Forum Page and get it answered by our experts. To post your chart now visithttp://www.wavesstrategy.com/Discussion/Discussions.aspx?type=start Call us on +91 9920422202/ +91 22 28831358 for any other details

Nifty sharp fall from 8800-8840 exactly as expected!

Bottom Line: Nifty continued to inch higher but the daily momentum is reducing and the bar size is getting smaller. It is time to stay alert!

The below research was published today morning before equity markets opened in "The Financial Waves short term update" by Waves Strategy Advisors. For subscription to this daily research report visit http://www.wavesstrategy.com/PriceNew.aspx 

Nifty daily chart:

 

	Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that “In short, Nifty is at crucial juncture again. A strong momentum above 8830 will extend this rally further towards 8900 mark whereas break below 8680 will be first sign of short term exhaustion.”

Nifty had a flat opening but later prices managed to cross above 8800 levels and closed near the day’s high at 8834. As mentioned earlier in the entire up move from the lows of 8270 not a single bar broke the previous day’s low let alone a close below the low. This is keeping the trend positive but prices have reached the zone of inflexion when one has to stay alert if there is sudden and sharp reversal. Also at the same time it is prudent to avoid creating shorts unless we see a “close” below previous bar low which is now at 8760 levels.

We have discussed about Neo wave - Extracting triangle pattern in previous updates. As per this pattern each up move gets smaller and down leg gets bigger. We can see that wave (e) has now reached towards 76.4% of wave (c) which is normally the Fibonacci relationship Indian markets are following. Along with this wave (e) has arrived exactly on the 49 days Time cycle which at times mark the turning areas. But Time cycle should be given 10% leeway and it is proved correct only after negative price confirmation which will be below 8680. Wave (e) has consumed 9 days but rallied by only 570 points so far as compared to wave (a) which rallied by 760 points in 9 days itself and protected the previous day’s bar low. This comparison is clearly showing that even though prices are protecting previous bars low it is not able to generate enough momentum that was seen during the formation of wave (a). On one bigger degree currently wave e of triangle is under formation and prices are currently in wave (e) of e so the rally looks to be in matured stage!

As shown on hourly chart, the up move started from 8350 has formed into double corrective pattern with wave c of second correction under formation. This wave c looks to be forming an Ending diagonal pattern which started from 8700 levels. So a faster move below this level will provide a strong negative confirmation that short to medium term trend has reversed.

In short, Nifty is in matured stage of up move and sudden reversal should not be a surprise. However, such sudden reversal should break 8700 and close below it. Because in many of the previous instances we have seen sharp reversal exactly on cycle day but prices somehow manages to protect important support area and closes above it. So a close below 8700 is must for short term negative confirmation. Next 2 to 3 days are going to be very crucial!

For research reports subscription on Nifty and stocks using Elliott wave, Time Cycles and various technical indicators visit http://www.wavesstrategy.com/PriceNew.aspx. Receive these daily research reports on email or access it directly from website. Contact us at helpdesk@wavesstrategy.com or on +91 22 28831358 / +91 9920422202 for more information.