Wednesday, November 2, 2016

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 3rd 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.

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