What should be the trading strategy
post RBI policy announcement? It is better to look at the Fractal nature and Elliott
wave pattern.
We believe that market does not move
in random fashion and it forms different kind of patterns as per Elliott wave
theory as well as basic technical analysis which can guide us for the upcoming
trend.
There are times when markets do form
similar patterns between the different time periods which is called as Fractal nature.
Below we have shown 2 charts of Nifty.
First chart is of 2016 and second chart is of 2014-2015 which shows up move in
form of Expanding pattern! Isn’t it surprising to see the development of
similar pattern!! “The Financial Waves Monthly Update” is published which covers
in-depth research on Nifty, BRIC
Nations, one stock from long term, Comex
Gold, Dollar index and Mutual Fund
investment.
Figure 2:
Nifty daily chart
(Elliott wave counts are purposely
removed from above chart and are shown in actual research report)
Figure 3:Nifty
daily chart for 2014 - 2015
Nifty
continued to move higher in the month of July and formed a bullish bar with low
near 8287 and high near 8675. Since the low formed at 6825 we have not seen a
single bearish monthly candle formation and the low of previous month have been
decisively protected. Bar technique
is one of the simplest and most objective way to understand the direction of
the trend and the method is completely unbiased. As per this technique …………
GST and Euphoria: The much awaited GST Bill was passed in Rajya Sabha on late
evening of 3rd August. On next day index we had a gap up opening
near 8600 levels but prices entered into red territory immediately. This was
pointing towards the fact that the news was already discounted. Nevertheless,
it seems markets are reacting a day later as there was a strong gap up opening on
5th August and buying was seen throughout the day. ……
Comparing the current rise from 6825 with that
of 2014 – 2015 rally: Look at the rise in Figure 2 and
Figure 3 closely. Both the patterns show expanding behavior. Movement from the
lows of 6825 matches the pattern of 2014 – 2015 very closely. Also the final
leg of up move in wave e formed an Extracting triangle pattern with rise
getting smaller and fall getting bigger. The recent pattern in form of wave e
looks similar where each of the rise has been smaller but falls are bigger.
This concept of seeing similar patterns at different time and degree is
known on Fractal nature.
To
get detailed outlook from medium term perspective on Indian equity markets,
stocks, Commodities - Gold, Forex, Mutual Funds, BRIC nations. Subscribe to “The
Financial Waves Monthly Update” by visiting Pricing Page
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