Euphoric rise in Nifty and especially a few stocks like Yes
Bank, Bajaj group and selected Midcap / Smallcap sectors has created extreme
optimistic environment.
It is during such extreme scenarios we need to be most
objective to understand the key reversal areas along with the risk associated
for being with the crowd. It is not easy to take a stand against the majority
especially when the rise is euphoric. Nevertheless, there are a few indicators
and methods that help us to understand maturity of trend. Also a trade requires
prudent risk reward ratio. Prices can continue to rise but one should analyze
is it worth the risk!
Now look at below few simple techniques and analyze yourself
if the indicators are making sense:
Nifty daily chart
with RSI:
The below excerpt is picked up from the daily research
report “The Financial Waves short term
update” published everyday morning before market opens.
TRIN indicator
that measures the amount of money flowing into the stocks is now again reaching
extreme overbought levels. Such readings are signal to be alert and we are
closely observing short term movement to gauge if the trend is indeed in
matured stages of up move.
PCR ratio has
now crossed above 1.40 which is not very often. Also prices are close to the
upper end of the channel resistance.
As shown on 60 mins
chart, (shown in actual research report) prices are respecting the short term
blue channel and also the 20 period Exponential Moving average. Decisive break
below ……. can result into retest of ……….. zone.
Slowly and steadily
the indicators are getting aligned but as mentioned earlier it will be only on
break of support levels there will be any negative confirmation. Break below
0-b trendline followed by faster retracement below …… will be bearish.
In short, the
uptrend looks to be in matured stages. Nevertheless, the rise had been euphoric
and prices can reach extreme levels before a reversal. Break below ……. can
result into short term sideways to negative action with ……….. as important
level to observe.
Few levels are
purposely omitted from above as the same is meant for our subscribers.
Nevertheless, the chart itself shows why we think prices are in matured stages
of up move. Throwover cannot be completely ruled out but think again is the
risk worth taking?
To get insight into
important support levels and Elliott wave perspective on Nifty and stocks you
can opt for the research report “The Financial Waves short term update”. For
Sample copy of your research Contact US
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