June
2016 was an eventful month with lot of news around the Globe that
resulted into very high volatility and sharp movements.
“BREXIT” was the
main focus in second half of June which resulted into big Gap down opening in
world Equity markets along with sharp appreciation in basket of currencies
against Britain Sterling – GBP. The selling pressure was seen across developed
economies but emerging markets still managed to outperform post 24th June 2016.
Nifty created a Gap of around 250 points with intraday low of 7925. This level
was protected post the event day……
Below is part of the research picked up from daily research report
“The Financial Waves monthly update”
Figure
2: Nifty weekly chart
Sharp
appreciation was seen in INR against GBP and Rupee appreciated by nearly 8% in
single day. Such sharp appreciation in currency pair is not a good sign as it
directly erodes the bottom line of companies having exposure to the UK. Even so
we are seeing some irrational exuberance
where the world markets are ignoring its repercussions and are again back to
the level or infact higher than that was seen pre- Brexit.
Nifty showed “V” shaped recovery from the
lows without any meaningful accumulation or pattern formation. Such movements
are not conducive from trading perspective atleast in index as it does not
provide prudent Risk reward ratio. During such scenario one should focus
on outperforming stocks that had managed to move higher irrespective of the
news or events.
Weekly chart of Nifty shown in Figure 2,
was previously update in January 2016 report when prices were near the lower
support trendline of the channel. It was then we mentioned about the reversal
is due from the lows which happened in late February after turning majority
bearish. The scenario is stark opposite now when prices have reached towards
the upper resistance line of this channel and majority has turning extremely
optimistic for target of 9000 back on Nifty. Crowd turns extremely bullish
exactly when prices hit crucial resistance and Fibonacci levels.
As shown on daily chart in Figure 3, (shown
in actual research report) we continue to think that the rise from the bottom
has been in double corrective pattern with current wave ……… of second
correction is ongoing. The internal counts of this wave ……. is not clear and
there is possibility we might start seeing some distribution from here on. In
addition to the above channeling technique the area of ……… is also near the
76.4% retracement level of the entire fall from 8845 levels to …… which can act
as reversal zone.
However, it will be only on faster
retracement of last rising segment we will get strong negative confirmation.
Unfortunately that level is now at 7925 which is far away from here. Break
below ……….might result into break of d-f trendline which will provide first
negative confirmation. So one should keep an eye on ………. followed by ……… levels
for medium term reversal.
In a nutshell, the current ongoing
leg …………..
The above research simply highlights use of channeling technique
and imagine the power when combined with Fibonacci
retracements, Time cycles and other advanced Elliott wave concepts – Neo
wave. To get in-depth research covering these techniques on Nifty, Midcap
index, Currency pair, FTSE 100, US Markets and much more subscribe to “The Financial Waves Monthly update”. For
subscription options visit Pricing Page
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