Thursday, December 15, 2016

Tata Motors inverse Head & Shoulder pattern and Elliott wave counts!

Below article gives detailed technical analysis on Tata Motors with concepts like Channels, Trendline, Elliott wave, Pattern.

Indian Equity markets have been able to digest the negative news so far especially when it is on back of a Global event. BREXIT, US Trump outcome, FED rate hike all of these events resulted only into a temporary move on downside and prices recovered back sharply on same or next day. This clearly highlights the fact that news or events do not drive the markets but only produces short term volatility or random moves. The original trend eventually resumes and it is therefore important to understand the objective techniques like Elliott wave, Time cycles, crucial support and resistance levels.

Let us look at how a few of these methods can be applied on stocks like Tata Motors. The below chart is picked up from our daily research report “The Financial Waves short term update”

Tata Motors 60 mins chart:

Wave analysis: (below research is from report published on 14th December 2016)

Despite of Tata Group being in news in the recent days, Tata Motors managed to close at the second position in the top gainers list. The reason can be contributed to the buying of Tata Motors near 486 levels by Tata Sons but as per the chart itself we were seeing accumulation pattern over past few weeks.

Now looking at the daily chart of Tata Motors (shown in actual research report), minor wave a is complete and now wave b of (X) has started on upside. This wave b can retrace towards …… levels which is also the Gap area created on back of the news or event few weeks back.

On 60 mins chart we can see that, post breaching the red channel support prices failed to move lower and completed minor wave a at the lows of 430 levels. Currently retracement of the previous down leg is ongoing in the form of minor wave b. Prices have now re-entered the channel. Another important thing to notice is that this stock has formed an inverse Head & Shoulder pattern and just managed to break the neckline which adds on to near term positivity.

In short for Tata Motors, near term trend will be positive as far as the recent low of 450 levels is intact. On upside, prices should continue to rally towards …… levels which is the head target and also the 61.8% retracement zone.

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