Bank of India: Application of Elliott wave, Channels, Moving average

Bank of India had been a major dragger for many years within the PSU banking space. Below article explains Application of Elliott wave, Channels along with Moving average and other technical analysis studies.

Below research is picked up from “The Financial Waves short term update” dated 25^th November 2016 which contains detailed technical analysis on Nifty, Bank Nifty, stocks.

Bank of India weekly chart:

Bank of India daily chart:

Bank of India 60 mins chart:

Wave analysis:

Bank of India has moved higher from 80 to 130 levels over past few months however long term chart suggest that this stock is in long term down trend and up move witnessed in current year is only the retracement of the prior down move.

The weekly chart since 2010 indicates that intermediate wave Y is ongoing which is forming Triple standard correction pattern. The bounce back witnessed from 80 level in start of 2016 is slow and corrective in nature which suggests that another wave (x) is ongoing. Hence one should be cautious before investing in PSU banks and should have strict stop loss. From medium term perspective, stock has resistance at 150 level which is also coinciding with black channel resistance.

As shown in daily chart, prices are forming complex correction pattern since the low made near 80 level. From the start of November 2016 minute wave z is ongoing which looks to be subdividing further.

As shown in 60 mins chart, post the steep rise from 100 to 130 levels price are showing corrective down move. This indicates that wave b (red color) is ongoing. In last session recovery was witnessed but move above …… is required to start the up move.

In short, …………..

Subscribe NOW to “The Financial Waves short term update” and see yourself why we cautioned our clients about reversal from 7900 support zone when majority were expecting a move towards 7500 on Nifty with detailed application of Elliott wave charts and other studies. Visit Pricing Page and get your copy of the research now!

Video update: How to trade Nifty using Trendlines and Indicators?

The above video explains outlook on Nifty using Bollinger Bands(r) parallel trendline concepts and other key reversal support and resistance areas.

#ElliottWave news channel is a short video series. Ashish Kyal of http://www.wavesstrategy.com/  will be going live weekly at 4 pm every Friday. Stay tuned to know the current technical state of markets and learn more on advanced concepts of Elliott wave, #Neowave and #TimeCycles.

Nifty applying Bollinger Bands® with Elliott wave for support, resistance reversal areas

Below article explains application of Bollinger Bands along with Elliott wave and channeling concepts on Nifty.

Indian Equity Markets has reacted negatively in last few weeks post the announcement of Demonetization by Government. Nifty has moved lower from 8598 to 7915 level till now and arrived near the BREXIT low which was created in the month of June 2016.

In current week there is less volatility and during the same time Bollinger Bands technique works well to identify important support and resistance levels. In the below 60 mins chart we can see that during the volatile move Bollinger Bands expands whereas during the sideways market it contracts.

Nifty 60 mins chart: (Research taken from today’s “The Financial Waves Short Term Update”)

(Part of research taken from today’s “The Financial Waves Short Term Update”)

Wave analysis:

“During sideways market, Bollinger Bands provide good support and resistance levels. Prices are now near the upper end of the Bollinger bands and the lower end of the band is at 7920 which is close to the previous pivot low formed two days back. 8105 is also the level of previous wave x and so strong momentum above it is required for retracement of the down move but unless that happens we can expect range bound movement between 8100 and 7920. Today being the expiry of the eventful month and sharp fall of past few days’ volatility can be expected in second half of the trading session.

From wave perspective we are currently in wave … of second correction pattern which is either forming a Triangle or a Flat correction as mentioned in earlier update. Post completion of this wave .. we can expect a retest of the earlier lows in form of wave …. Also normally important lows are formed on back of positive divergences. There is no such divergence on daily or hourly chart and this is another reason why we expect retest of lower levels again.

In short, Nifty can continue to consolidate within the mentioned range. Trading strategy should be selling near resistance and buying near supports with strict stoploss to capitalize on the consolidation.”

To know the short to medium term Elliott wave counts on Nifty as well as important reversal areas, subscribe to “The Financial Waves Short Term Update” which covers Nifty and 3 stocks on daily basis. For subscription options visit Pricing Page

Nifty flirting around 8000 levels! Applying parallel trendline concept and Elliott wave!

Below research is picked up from "The Financial Waves short term update" by Waves Strategy Advisors - www.wavesstrategy.com To subscribe to daily research report visit the website.

Nifty daily chart:

Nifty 60 mins chart:

Wave analysis:

In the previous update we mentioned that, “In short, Nifty continues to drift lower in last session. It is only on move above 8150 followed by 8210 will suggest positivity however any break of 8030-8000 zone will lead to panic selling”

Nifty opened near 8100 levels but only to enter into red territory immediately. Selling pressure continued to build up throughout the day and majority of stocks along with high beta Midcap and Smallcap sectors ended in deep red territory. It is prudent to avoid catching a low in such market unless and until we see decisive close above the previous day high.

Nifty has now broken the psychological level of 8000 as well. This time the fall has happened after breaking the downward sloping channel on downside which was also on back of the event on 9^th November. On the same day there was sharp positive retracement and Nifty touched 8600 the next day on 10^th. Post that the strong selling pressure started building up. Such high volatile swings result into tricky trading environment which we are witnessing now, especially when the global markets are stable and US markets have been touching new life time highs. It is not very often to see such wide divergence between Indian equities compared to global markets. Nevertheless, during such scenarios one needs to wait for close above previous day’s high for some indication that there is a pause or atleast temporary halt in the selling pressure. In the entire down leg from 8600 there is not a single close above the previous day’s high.

We are showing parallel red channels on the daily chart which has provided support during the spike low of 8002 on 9^th November. The problem is there is no major downward sloping channel and so we need to make use of parallel trendlines to identify the important support zone. 7925 was also the level created on the day of BREXIT event. Such spike lows are important and if Nifty continues to move below 7900 then the next parallel trendline support near 7600 will open up.

As shown on hourly chart, the fall from 8600 looks to be in double corrective pattern with wave a of second correction currently ongoing. During this entire trend 15 period Exponential Moving average has worked very well as resistance and we have not seen decisive hourly close above this average all the while. Also for any positivity we need to see break above the red trendline along with faster retracement above 8105. Unless that happens the short term trend will remain negative.

In short, trend for Nifty is negative as prices have closed below psychological level of 8000. Further negative close below 7900 will open up more downside possibilities. Immediate move above 8000 is required to hint towards atleast a pause in the downtrend with 8105 as important resistance on upside.

For daily update along with detailed Elliott wave counts on Nifty, Bank Nifty, Stocks, “The Financial Waves short term update” with short to medium term outlook and key reversal areas. For more details visit Pricing Page.

Video: Nifty, Are you stuck? What is Next?

#ElliottWave news channel is a short video series. Ashish Kyal of http://www.wavesstrategy.com/  will be going live weekly at 4 pm every Friday. Stay tuned to know the current technical state of markets and learn more on advanced concepts of Elliott wave, #Neowave and #TimeCycles.

Impact on Nifty post Modi fights corruption, President Trump?

Where is Nifty headed post the Indian notes and US votes? Nifty has managed to recover massive 450 points from day’s low near 8000 mark. 

Events result into short term random movement but eventually original trend resumes. Today was all about the patience game. It seems that it is not only India but the entire world is craving for a change. Much awaited US Presidential Election outcome is finally here and funny part is markets are at the level where they were supposed to be irrespective of who is elected in US. 

In morning we saw a knee jerk reaction due to duel impact post Mr. Modi announced a sudden step of withdrawing Rs. 500 and Rs. 1000 notes from midnight itself and uncertainty was looming in US Presidential Election. 

We believe that market reacts on news or events that produce only temporary blips and eventually the original trend resumes. Today is also a classic case of this and we have already seen what happened post #BREXIT as well.

Now read below a brief gist on Nifty produced from “The Financial Waves Trading update” that covers Nifty intraday trading strategy as well:

“This is a very bold step towards curbing down black money but will result into short term liquidity crunch. The impact can be multifold on the Real Estate and other related sectors that has transactions majorly in cash. This can adversely impact banks as they might have to increase provisions for NPA for coming quarters in case they are exposed to lower quality credit loans. Markets hate uncertainty and this is surely one such time when no one knows how the economy will be impacted by sudden curb of black money that had created a parallel economy over many years. Over long run this is a brilliant measure that will help bring back money in productive form and create stronger base but definitely over short term it can create panic especially when the rally was driven majorly by liquidity.

To add fuel to this the uncertainty still looms over US Presidential Election and it is unclear if Hillary Clinton is going to make it. Global markets are already substantially negative as of now.”

Now coming back to Nifty there was a sharp bounce back from the lows of 8400 but the combined uncertainty is going to result into a sharp Gap down opening below the previous low as well. From wave perspective it seems the up move was only wave b of z and we are going to see down move in the form of wave c. Trading such sharp fall can be a challenge as there is not going to be any risk reward. Also long positions will be stuck due to the event driven fall and am sure no liquidity to meet the margin calls will further add to the panic scenario. 

Nifty 60 minutes chart:

This is a classic case that highlights the fact that one should only risk that much in markets that one can afford to lose otherwise an event like this can make you out of the game very soon. Prudent money management strategy is very crucial as the risk or stoploss in such cases will not help.

The above chart clearly shows that the event only resulted into a temporary move on downside on both the cases and eventually prices will reach the level seen prior to the event. 

Elliott wave theory and other technical studies help us to understand the maturity of trend and provide objective way of analysis. Such sudden reversals should be incorporated in trading strategy.

Below is the Nifty trading strategy mentioned in today’s morning research report –The Financial Waves trading update even before equity markets opened. Look for yourself even without knowing the panic low the strategy has worked brilliantly thereby giving nearly 350 points gain.

Strategy for the day: For today, avoid creating short positions as risk reward will not be favorable. Long positions can be created if Nifty manages to bounce back 100 points from the lows and sustains for an hour with day's low as very strict stop and target of 8450. BANG ON!

Happened: Nifty bounced back from the lows and recovered back to the highs of 8475 on intraday basis. We cannot be more accurate than this and it simply shows the power of objective methods rather than relying on news or events to take decisions.

Subscribe NOW and trust me it is indeed a thrilling experience to see such strategies working on intraday basis even on event day. Visit Pricing page, select your product and we will set you up for your daily report before market opens.

Axis Bank: Why Impulsive move provide best trading opportunities?

Axis Bank has been leading the fall this time and yes the movement has been impulsive as per Elliott wave pattern.

Below research shows the internal counts of Axis Bank along with the bigger degree outlook. We turned bearish on this banking stock as soon as the fall looked impulsive and when it was moving down in 3^rd wave.

It is not very often to see impulsive moves when majority of stocks and indices are moving in complex corrections. This simply shows trading becomes very easy if one can cite such impulsive behavior as predictability increases drastically.

Axis Bank daily chart:

Axis Bank 60 mins chart:

Wave analysis:

The below research is picked up from the daily research report “The Financial Waves short term update”

Yesterday in the overall banking sector selling emerged during the closing hour and Axis Bank from this sector turned out to be the major looser as it was down by 2.58%.

The daily chart suggests that post the completion of wave B at the highs of 640 levels now wave C has taken its place as the entire previous leg is taken out in faster time. The fall from the peak has breached the channel support along with the moving average line which was intact in the entire previous up move this suggest that medium term top is in place for this stock.

As shown in 60 min chart, prices are moving down in impulsive fashion within the red downward sloping channel. Currently from the highs of 540 levels a sharp fall was witnessed which suggest that minor wave v has taken its place. It looks to be subdividing further and the last minute leg of the same is completing its course.

In short, ………

The above research clearly highlights impulsive behavior in one of the major private sector banks. Nevertheless, always remember after completion of 5 waves on downside we will see upside part retracement of this down move which will provide better trading opportunity. So based on Elliott wave counts and pattern combining Risk reward ratio one can devise prudent trading strategy objectively without relying on news which are most of the times delayed.

Subscribe NOW and get access to your copy of this research that shows detailed technical analysis on stocks, Nifty, Bank Nifty and detailed Elliott wave counts, patterns in combination with various indicators. Also in case of queries you can always write back to us or post it on our Discussion Forum. For subscription option simply visit Pricing page and select Equity research report and we will set you up for daily research via Email and Client login section.