Nifty Fractal Nature worked brilliantly! What is next?

Understanding the Nifty trend with Fractal nature along with Elliott wave, Channels and RSI!

What is Fractal Nature: Nature exhibits Fractal nature across the universe. This nature is exhibited even by stock markets. Similar patterns are repeated across different degrees of time which is termed as Fractal Nature.

Based on the same concepts we published research on Nifty identifying Fractal nature on 60 mins chart. The part of the same is taken from “The Financial Waves Short Term Update” published on 17^th February 2017.

Nifty 60 mins chart: (Anticipated in the morning of 17^th February 2017)

 Nifty 60 mins chart: (Happened till now)

(Part of research taken from 17^th February 2017)

Wave analysis:

“On Nifty, the pattern seen over past few days look very similar to that seen during the previous wave x formation. This is highlighted on the hourly chart. It is interesting to see how closely both the patterns resemble. The previous wave x formed a low near 8327 on 23^rd January. During this move as well, the fall was sharp but only to form wave x. Failure to see follow-up selling below previous day low the chances of another wave x formed at the lows near 8715 is high. If Fractal nature is into play then we can expect a break on upside like the ones seen in earlier pattern.

For a trader it is not easy to change the stand very quickly. But in this dynamic environment when markets are moving very fast it is best to adapt to the new price information as quickly as possible. In case Nifty manages to decisively break above 8825 resistance zone we can expect sudden spurt on upside due to short squeeze and fresh long build up.”

Nifty gave a positive breakout as expected and prices moved from the levels of 8760-8770 to recent highs of 8980 based on Fractal nature. In the current market trailing stop method is the ideal strategy to capitalize the trend as long as it goes!

To know the Elliott wave pattern along with important levels on Nifty and 3 stocks, subscribe to “The Financial Waves Short Term Update” and selecting the Equity research report Services

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Webinar: Reliance Breakout - What is next for Nifty?

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Topping Time cycles & A BIG Triangle pattern – Reliance Infra

Topping Time cycle of 126 weeks has been working very well to provide important tops on Reliance Infrastructure. Look at the detailed Elliott wave counts in this research…

“The Financial Waves Short Term Update” covers Nifty and 3 stocks with in-depth research on daily basis. In today’s report we have covered long term picture of Reliance Infrastructure and part of the same is shown here. Below chart also shows power of Time cycles.

Reliance Infrastructure Weekly chart:

  

Wave analysis:

Reliance Infrastructure is a classical example that shows how weakly a stock can underperform. This stock made a high near 1400 levels in year of 2009 and even now it is trading near around 550 after touching a low of 280 in 2015. This clearly shows that the strategy of Buy and Hold will not necessarily work for all the stocks. The same is true even for index heavy weight Reliance Industries. It has been more than 8 years since this stock has given any returns to investors (until today J)

Reliance Infra has been moving in a big contracting pattern which looks like a Triangle since 2008 onwards. The entire structure has been in corrective fashion with each leg smaller than the earlier one. The primary wave (E) itself looks to be forming a triangle and prices are now in wave (b) of this triangle. Post its completion we should see a strong move on downside back towards 400 levels. Also the rise in wave (b) is clearly in overlapping fashion which adheres to our Triangle pattern assumption.

From the start of February 2017 prices are moving higher in form of minute wave c which is forming an Ending Diagonal pattern. Momentum has been failing to pick up and so any reversal below ….. will be a bearish sign as it will break…..

The strategy for above stock is shown in original report which is not shown here. To know the outlook on Nifty and stocks, subscribe to “The Financial Waves Short Term Update”

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Time cycles are important aspect that cannot be ignored if you are a Trader or a Technical analyst. A right trade but wrongly timed can be disastrous. At the same time, Cycles are very challenging to predict and they go away without providing any signals. It is therefore extremely important to combine both Time cycles with Price forecasting techniques like Elliott wave and Neo wave. Attend the two days of exhaustive training on Combining Time cycles with Neo wave to be held on 18^th and 19^th March 2017 in Mumbai. Learn more

Intraday trading diary on stocks to win CNBC TV18 Bull’s Eye stock trading show!

Intraday trading techniques followed with stock selection and trading strategy adopted that helped to win Bull’s Eye stock trading show on CNBC TV18.

Nifty had been all over the place during the week from 13^th February 2017 to 17^th February 2017 during which the trading show was held. The most important thing that I personally followed is to understand the direction of major index before stock selection on each day. This helped me to gauge out of 4 stocks to pick daily how many we need to have on the buy or sell side.

Notional amount of 400,000 was given that has to be spread across 4 different stocks on daily basis.

13^th February trades: During the week Nifty had been constantly struggling to cross above the important resistance level of 8810 – 8825. We mentioned the importance of these levels even in our daily Equity research reports. Also a peculiar thing was Nifty was opening near the highs and later giving away the gains from the same level. This behavior made me keep 2 stocks on the short side and 2 stocks on the long side as there was no negative confirmation but prices were also struggling at higher levels. This was contrary to majority who were bullish. Stock tips – Buy HCL Tech, United Spirits, Sell Hindustan zinc, Jet airways.

14^th February trades: By 13^th broader markets confirmed the deterioration in the overall breadth and so it made more sense to have 3 stocks on the sell side and just one on the buy side again because there was no negative close below previous low on Nifty to confirm all shorts. So it made sense to have one on buy side in case the resistance level breaks. Sector outlook was also very important for stock selection. Stock tips – Buy Cairn India, Sell  Apollo Tyres, Jet airways, Union Bank.

 

15^th February trades: On 14^th as well Nifty reversed from 8820 levels i.e. opened near the day’s high and selling pressures intensified in broader markets with overall breadth deteriorating. So it now became prudent to go shorts on Midcap or smallcap stocks as they are high beta and long on a stable stock with very small stop to keep the profits intact on the shorts. Nifty showed strong selloff from 8807 to 8713 levels. Stock tips – Buy Cairn, Sell DLF, Apollo Tyre, KSCL (DLF and KSCL gave best returns in shortest time as Midcap sector was capitulating)

16^th February trades: Sharp selloff on 15^th February with close below the previous day and break of 8715 increased the odds that the down move was getting bigger. However, we were yet to see close below 8715 as this was channel support on Nifty as well. So I still preferred keeping one stock on buy side. The stock - CESC on buy side was picked that was outperforming and did not move lower with the broader markets and of course having good individual chart pattern. Stock tips on 16^th Feb – Buy CESC, Sell CONCOR, Bank of India, Crompton Greaves.

17^th February trades: On 16^th February Nifty reversed protecting the low of previous day and also protected 8715 support that was channel trendline. The reversal was across the board and the pattern looked very similar to that seen during the earlier wave x formation.  You can read about FractalNature of markets in my video update. On basis of this Fractal Nature and movement there was high chances that Nifty will turn back positive and break 8820 level on upside. We mentioned about this in our daily equity research report – The Financial Waves short term update on 17^th Feb morning itself. Stock tips on 17^th – Buy CESC, Bharat Financials (earlier SKS Micro), Marico and Apollo Hospitals.

The above strategy clearly highlights the fact that knowing the direction of major index is extremely important even when individual stocks have their own technical picture. These stocks lose their identity if the major undercurrent or index tone is strongly trending in one direction. On 17^th February index indeed break the level of 8820 which was protected for so long and helped us to gain even on 17^th February. 

Evaluating individual stock technical charts are also important but identifying the number of stocks to be on the buy or sell side on each day based on overall market tone was the key to trading success during the week. 

For reference anyone wants to read about strategies followed in May 2016 can refer the following link: Rules followed during ET Now game show where I won with substantial margin can be found in this link – Rules followed to win ET Now show by Huge margin

Another Bull’s eye trading strategy followed in September 2016 – Trading strategy to win September 2016

The above is just to share across my personal experience during these shows. There are instances when a few strategies do not work and we need to change it as per market dynamics. One such instance was buying outperforming stocks near new highs did not result into desired outcome as the overall market was losing momentum. So I constantly thrive to change the strategy based on market dynamics. And yes the major driving factor for all of the above strategies were – Elliott wave, Neo wave, Channels, Bar techniques and Time cycles to understand the overall tone.

I find it extremely important to share across trading strategy that helped me in stock selection and come out as winner in this game of probability. Happy Trading!

Learn about the various strategies in detail along with Elliott wave, Neo wave and Time cycles at the two days workshop on 18^th and 19^th March 2017. Learn more

Webinar - Nifty Fractal Nature and Trend Ahead!

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Cashing the Crash – Bank of Baroda, Tata Motors using Elliott wave!

Tata Motors shown serious capitulation in less than 2 trading hours and so did Bank of Baroda. Even when Nifty has been in a range these stocks declined sharply providing brilliant trading opportunity.

You can read detailed analysis on Tata Motors cashing the crash!

As per Elliott wave there are many corrective patterns like Flat, Zigzag, Triangle, Double correction, Triple correction and Complex correction. Understanding the pattern is easy but it is more important to identify the same when pattern is under formation so that next trade can be taken with proper risk reward ratio.

What is Elliott wave Flat correction pattern? This pattern is divided in 3-3-5 which means first 2 legs which is a and b are corrective waves. In this, wave b should retrace more than 61.8% of wave a. Post the completion of wave b, we can expect wave c should start in opposite direction to that of wave b in form of 5 waves i.e impulsive in nature. Bank of Baroda 60 mins chart meets the exact criteria. The below research is taken from “The Financial Waves Short Term Update” which was published on 14^th February 2017

Bank of Baroda 60 mins chart:

(Part of research taken from today’s report i.e 14^th February 2016)

Wave analysis:

“There was strong selling among the PSU banks and despite of Nifty closing in the green territory these stocks were the major laggards in the last trading session. Bank of Baroda was the major loser and it was down by 10.56% exhibiting a free fall from the peak.

Post the lows of 110 levels at the early 2016 this stock is forming a complex correction within the blue upward slopping channel. Wave z of the same was forming a flat correction pattern which now looks to be complete at the recent highs of 190 levels and the next leg has started on downside. As per this scenario using bar technique would be advisable and stay bearish as far as the previous bars high is intact on closing basis.

As shown on 60 mins chart, yesterday there was a Gap down opening at the start of the day and then there was complete domination by the bears over this bank. The entire previous rise was taken out in faster time with a series of red candles. As per wave perspective the complex correction looks to be complete at the recent highs and now the downtrend has started so outlook will remain negative. ….

Elliott wave can help us to place ourselves in the right direction of market with proper risk management strategies. To know the in-depth research on Nifty and 3 stocks on daily basis subscribe to “The Financial Waves Short Term Update” Subscription options

Learn Time cycles combined with Neo wave in the most advanced training on Technical analysis. This two days workshop will equip you with various tools require capturing the major turning junctures. Majority had been bullish for Nifty to immediately move towards new highs post the Budget session but we maintained our apprehension based on these important techniques that suggested otherwise. Enroll now and get free access to research reports and much more.