Trading using technical analysis depends a lot on the pattern you are seeing and what is the expected outcome. Deviation from expectations is the risk. So a successful evaluation of Risk – reward ratio can happen only once you identify a pattern.

Neowave is advanced concept of Elliott wave and has different patterns. We identified Diametric as one such pattern under formation when it was in its earlier stages of formation. Such pattern identification has helped us to jot down the path prices will follow not only for few days but months as well.

Now look at the below chart along with the path shown in “The Financial Waves Monthly update”published on 5th October 2015

Nifty daily chart showed on 5th October 2015 monthly update

Figure 3: Nifty daily chart

In previous monthly update published on 5th October 2015 we mentioned the following: “We will be keeping a close watch on the market leaders that were resilient during the last stage of fall and they should start showing weakness when wave f reaches towards the matured stages of upmove.  Diametric pattern continues: So far so good… Prices have behaved exactly as per this pattern since March 2015. So as long as our predictions continue to be accurate we will stick with it and only a strong break above 8550 we will evaluate strong bullish possibilities. For now the current up move is wave …….. and post that the downtrend should resume in form of wave ……... This upside leg should consume around 10 days to 13 days and can travel towards 8300 – 8400 levels.” BANG ON!

Nifty continued to behave exactly as expected even in month of October 2015. Prices moved higher in the form of wave …….. of the Diametric pattern and reversed from target zone of 8300 – 8400 which we have been constantly mentioning. This clearly shows power of pattern.

To know what is next from here and how do we expect prices to behave – Subscribe now to “The Financial Waves Monthly update” for medium term outlook and “The Financial Waves short term update” to understand the smaller swings that ultimately makes up big moves.

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