Nifty trading strategy post Impact of Mauritius treaty!

What is news around Mauritius Tax treaty agreement?

Amendment to the Mauritius Double Tax Avoidance Agreement, which comes into effect April 1, 2017, will give India the right to tax capital gains from investments coming from the tax haven.

Nifty had a Gap down opening on back of the event but prices filled in the entire Gap area and came to the point where it left the previous day!

We believe that news or events results into a temporary movement and then the original trend resumes eventually.

Below chart clearly reflects the area from where Nifty reversed and the crucial levels that is important to breach for trend reversal confirmation. Trading based on news can have significant negative impact on the trading method and it is therefore important to use objective techniques like Elliott wave, Channels, Fibonacci retracement and projections to understand the maturity of trend.

Nifty 60 mins chart:

Below is the research gist published in “The Financial Waves short term update” today morning before the markets opened mentioning the key support and resistance levels one has to watch from trading perspective.

Elliott Wave analysis:

Nifty can have a Gap down opening in today’s session after India gets right to tax capital gains in amended Mauritius tax treaty. Given the event it is very important to look at the closing levels which will confirm if short to medium term direction is indeed changing.

Let us try to understand the technical structure with key levels that will confirm the reversal. Events can result into temporary spike but markets will do what it is supposed to eventually. It is therefore important to look at important support of 7730 – 7740 levels in today’s session.

The daily chart shows ….showed in actual morning research report along with detailed Elliott wave counts.

As shown in 60 mins chart, prices are testing the red channel which will act as resistance as per polarity reversal. Move below ……. followed by ……….. will break the channel support and also retrace back complete wave………. So irrespective of the event one has to keep an eye on these levels and if it gets broken then the trend towards …………..or lower levels can be expected.

Nifty has been moving within the channel range irrespective of the news! Break of important support or resistance levels will set the tone for short to medium term trend.

A positive close will change focus and news might look something like this: Tax evasion and corruption will be curbed that will help India in economic growth whereas a negative close will result into following news headline: Indian markets nervous on concerns of FIIs pulling out money given the Mauritius tax agreement treaty.

News is only the post mortem after the move has happened. Elliott wave, Time cycles and other advanced concepts of technical analysis help us to forecast the future and determine the key levels that will change the trend irrespective when the majority is caught in surprise on opposite side!

“The Financial Waves short term update” is a daily research report that shows detailed support and resistance levels along with Elliott wave counts, Time cycle concepts and other technical indicators applied on Nifty, Bank Nifty, stocks providing good trade setups opportunity. For subscription visit the Pricing page.