Nifty: Application of Bollinger Bands® Elliott wave structure and Momentum for capturing intraday reversals!

Nifty has moved sharply lower after coming close to the psychological level of 8000. During the up move of 9 days from 7725 levels there were only a few stocks from the index that participated and majority of the stocks moved in a range. Also the momentum was not picking up which was measured using RSI indicator. A few of the technical studies helped us to stay alert and not get carried away in the 9 days of slow up move. We were constantly talking about weak momentum and warned our subscribers that one minor push on downside cannot be ruled out before we bottom out.

See yourself below from the chart of Nifty picked up from daily research report “The Financial Waves short term update”

Nifty 60 mins chart: (published on 2^nd December 2015)

Happened: as of today 2.50 pm

           

Wave analysis:

Following was published on 2^nd December 2015 in the morning:

In previous update we mentioned that, “Today there is RBI Monetary policy meeting. In the last meeting of 29^th September 2015, Mr. Raghuram Rajan has already reduced the key policy rates, so this time there is high probability that Status Quo will be maintained.”

As expected RBI kept the policy rates unchanged. ..Yesterday was another day where prices failed to generate the momentum even after taking out the high of prior bar of 7966 level. During the strong trend momentum increases on upside as trend goes further however in current trend momentum has not picked up yet. These are the conflicting signals which indicate that one should stay alert in case of sharp reversal.

On short term charts also Bollinger Bands have contracted which suggests that ongoing trend is not strong till now. We have been mentioning this because during the strong trend Bollinger Bands tends to deviate or expand from the mean which we have not seen till now.

In short, outlook remains the same that Nifty has been failing to generate the momentum on upside. Strong hourly close above 7970 is required to continue the up move in form of wave (x) however any move below 7865 will be the sign of negativity.

Happened: Our cautious stand has been vindicated and as soon as the support level of 7865 was broken there the downtrend resumed.

I have observed that as long as the pattern is clear predictability is high and one can indeed capture the swings irrespective of events. We are now again approaching towards the time zone where slowly the indicators are getting aligned together but this time not on downside! Yes, we have captured brilliant moves on downside but this time the indicators are slowly shifting their direction to up and so is Time cycle.

To know why we are now arriving at crucial juncture subscribe to “The Financial Waves short term update” and see yourself how most basic indicators can also be used for the best of the intraday trade setups. For subscription options visit Pricing Page and select Equity research report, pay online and get instant access NOW!