Nifty and Bank Nifty Is a low in place? Will positive divergence work?

Nifty has been moving in volatile environment but even when Nifty broke below the earlier lows it did not produce downside momentum. On the contrary many have been extremely bearish by simply looking at US or global markets.

We can see series of positive divergences both on daily as well as hourly charts on Nifty and along with that Bank Nifty has still managed to protect its lows of 8^th October 2018 even when Nifty broke to fresh lows. This is a classical intramarket divergence. See the series of divergences below:

Nifty and Bank Nifty hourly chart:

Following was mentioned on 26^th October morning equity research report –

As shown on hourly chart, prices are currently near the resistance trendline and are hovering around it. After many weeks we are seeing the fall is getting smaller and smaller and the intensity looks to be reducing. Now break above the resistance level will suggest sudden reversal on upside. The chances of Extracting Triangle pattern will be high unless we see strong momentum building on the downside. As per this pattern post completion of wave (c) on downside we should see wave (d) which will be bigger than wave (b) rally. We will focus on wave (d) rally once there is confirmation by break above …. levels…. I think we should complete wave (c) on downside very soon but it is better to wait for resistance break for confirmation of a positive trend when majority will be caught by surprise.  chart: a classical intramarket divergence. See the series of divergences below:

ong with that ve been extremely

Happened: We have been warning our subscribers that the downside speed is reducing and it is better to stay alert in case of sudden reversal. On 29^th October, Nifty rallied by more than 200 points in single day. This clearly shows it is so very important to identify the pattern as per Elliott wave.

Series of positive divergences - With the rally we got series of positive divergences on index. You can see from the above chart where Nifty made fresh lows but RSI on hourly scale made a higher low. Also when Nifty touched 10004 levels, Bank Nifty managed to protect its earlier lows thereby giving classical intramarket positive divergence.

With the momentum reducing on downside despite of weak global markets and extreme pessimism is it time to take a contrarian stand and bet on upside?

So, which levels to expect on upside and what should be the stop. Know all this in the daily equity research report – “The Financial short term update”. We are on cusp of strong reversal provided the resistances are taken out decisively. But expect a good trade setup as Time cycles are also nearing the lows!

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CEAT Tyre: Is a major low in near vicinity? Fibonacci application

Fibonacci series are used to predict the potential areas of resistance and support. It helps the investors to determine multiple price targets. It needs to be combined with other technical analysis to improve its accuracy and it goes well when applied with Elliot Wave theory.

Ceat tyre has been moving towards lower levels making 52 weeks low near 998 levels with no attempt of positive reversal. We have been bearish on this stock when it lost its substantial value after quoting it’s all time high and started making lower high lower low pattern.

Below is the daily chart of CEAT Tyre showing detail analysis using Neo Wave, Moving Averages and Fibonacci technique taken from our daily equity research report published under the name of “ The Financial Waves Short Term Update.”

CEAT daily chart:( Anticipated as on 28^th September, 2018) 

CEAT daily chart:( Happened as on 24^th October, 2018)

 

(Below is the gist taken from equity report published on 28^th of September, 2018)

Anticipated:

Tyre companies like MRF Ltd, Apollo tyre, Ceat ltd; have been under pressure from past few trading sessions. Even in last trading session Ceat stock prices cracked by 5%, making 52 weeks low near 1168 levels.

Fibonacci series: This is a common method in technical analysis which is use to drive support and resistance areas. On daily chart of Ceat, prices are forming Diametric pattern and are currently in last leg in form of wave g. As per the guideline, wave g of Diametric pattern tends towards 61.8% followed by equality with wave a. Considering this we can expect prices to move towards 1120. Break below 1120 levels can further infuse selling pressure taking the prices southward towards ……...

As shown on hourly chart, wave g is forming Complex Correction pattern. Currently wave c is ongoing on downside. On upside an important resistance is placed near 1250 levels as long as this is intact on upside move towards …………. can be expected.

In short, Ceat trend remains negative. Move towards ………can be expected. This will be the preferred scenario as long as 50-periods EMA is intact on upside.

Happened:  Bears have completely gripped their position on Ceat.  Prices have moved as expected falling more than 76.4% of wave a move and made 52 weeks low near 998.50 levels.

The stock has achieved our targets and is now nearing a major reversal zone as per Fibonacci projection, Elliott wave pattern and indicators. Is it time to start looking for bottom fishing? Are stocks going to hit a major low and reverse back sharply?

To know details about other stocks and how far the index will fall subscribe to our daily equity report “The Financial Waves Short Term Update”.

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Nifty: Time cycles when will it reverse back on upside?

Just like economy has its recession and booming cycle, similarly each stock and indices has its own cycle of topping and bottoming. Time Cycles are used to predict the turning points when used with other aspects of Technical analysis. Cycle lows are normally used to gauge the time period of cycle and accordingly helps in estimating when the next low will be formed. We have been using Time Cycle along with Elliott wave technique to tap the turning points of Nifty 50 and other stocks.

Below are the charts with detail analysis on Nifty showing why we turn bullish or bearish based on Elliott wave counts and Time cycles!

Nifty daily chart - Time cycles applied

In the previous monthly update published in early September 2018 we mentioned that “the overall trend looks matured and we have started seeing the volatility. The indicators have entered into extreme levels but it has been more than 22 weeks since we saw lower high and lower low on weekly charts. This week we closed below 11595 which is negative close below prior week in nearly 22 weeks. So it is time to be cautious for sure and post this short term up move is over the downtrend should resume. This is another way of following the trend. To avoid the confusion and put it simply the trend looks matured and next few days are crucial for confirmation. Fresh longs should be created with caution. A decisive move below this week’s low of 11393 is important which will be first sign of concern that the trending move is over and the Price and / or Time correction is starting! The ongoing mania is going to culminate equally fast and one should be quick to change the stand as and when it happens.” BANG ON! 

 

Following was published in monthly update on 8th October 2018: 

Nifty moved precisely as expected and prices started the BIG correction. We can clearly see that the ongoing mania on upside culminated equally fast and now the optimism has turned into pessimism. The severity of selloff seen across the board was earlier witnessed only in 2008.

If you look at the entire rise in the form of wave g has been now taken out in less than half the time than wave g took to form. This strongly confirms that the top has been in place and the same should remain protected for months to come. The entire tide has turned and now the buy on dips market has turned into a sell on rallies. It is best to avoid catching a falling knife even though short term pullback from oversold state is not completely ruled out.

Monthly chart: We are showing important tops formed as per Figure 1.(shown in actual monthly research report published to subscribers) 2008, 2010, 2015 and now in 2018. All of these tops have resulted into a down move of atleast ……….. months and the maximum of ………. months. If we take the average of this then the current fall can extend to the extent of ……… months. Also in terms of price the fall has been anywhere between ………… points. Taking the averages of all the fall then we can expect a correction of approximately ………. points in over ………. months. The reason for expecting the average to be maintained is that prices are moving precisely within the channel and has been reversing from the upper resistance trendline. So there is a tendency to retest the lower trendline of the channel which is also coming near 9??? mark. So we can expect the ongoing medium term trend to come down towards this level. As the indicators are in oversold state short term pullback cannot be ruled out but that is only going to be temporary. There is also negative divergence on monthly charts.

Neo wave pattern: As shown in figure 2, prices might have completed the primary wave (1) on upside and now have started wave (2). As the entire rise was corrective in nature there is high possibility that this rise was first leg of a Terminal pattern (Ending Diagonal). The only impulse pattern in which waves 1, 3 and 5 are corrective is Ending Diagonal. Also in this pattern there is tendency for wave 2 to retrace nearly 61.8% to 76.4% of the rise which gives the downside zone as ……….. thereby giving the average bottoming area as 9???. So the levels derived using different methods are giving the similar outcome.

Short term pattern: …..

Time cycles: The cycle top was formed early and now the bottom is only by 1^st or 2^nd week of November. Volatility is going to be high and one has to be quick in booking partial profits and trailing remaining to make the most out of the ongoing trend.

The next cycle low will be in November and before that we should start seeing reduction in volatility and some base formation. So, are we starting this bottom pattern formation? I think we might soon provided the important support levels remain intact for a few days. Its time to get ready again when majority might be caught offguard. But again, only if the important support level remains protected and we see faster retracement above the last falling segment which is still awaited.

The above analysis clearly shows how well the cycle theory works. To know what are the different cycles that can be applied, on stocks as well as major indices and other various techniques. Get access to monthly research report along with short term equity research report - The Financial Waves short term update.

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Bata India: Is it time for reversal or trade on short side?

Bata India had lost substantial value from its high. But was there a way to know it back then? Absolutely Yes, we turned bearish on this stock when it started making lower high lower low pattern after making a high near 1115 levels.

We have sufficient proofs in form of research reports that can be referred why we turn bullish or bearish based on Elliott wave counts. You also have the opportunity to learn this Elliott wave, Neo wave theory. See here

Below is the hourly chart of Bata India showing a detailed analysis using Channels, Elliott wave technique and Moving averages.

Bata India 60 mins chart:(Anticipated as on 8^th October, 2018)

                    
Bata India 60 mins chart:(Happened as on 23^rd October, 2018)

 

(Below is the gist taken from our equity research report published on 08^th October, 2018)

Elliott Wave analysis:

Bata India post completing its impulsive rise near all time high level of 1115, stock then underwent selling pressure and has failed to show sign of retracement of its current fall which indicates the top is now in place.

As shown on weekly chart, prices made the biggest red bar in the previous week and retraced more than 61.8% of its prior rise. Stock corrected by almost 10% in a week time indicating strong grip of bears. Further we can expect a move towards lower levels near 840 in upcoming trading sessions which is 76.4% retracement of the previous rise.

As shown on hourly chart, prices are forming Complex Correction pattern in which wave a is completed on downside near 850 levels and wave b is ongoing. We can use the strategy of selling on rise near channel resistance as prices are moving in form of wave b and we can further capture the move on downside near 840 levels in form of wave c. On upside one can use upper trendline or 50-period EMA as immediate resistance.

In short, trend for Bata India is bearish. Any pullback near can be used as shorting opportunity for a move near 840 levels.

Happened: “We can use the strategy of selling on rise near channel resistance as prices are moving in form of wave b and we can further capture the move on downside near 840 levels in form of wave c.”BANG ON! Prices have behaved as expected giving a rise towards its Channel resistance trendline and then witnessing a fall taking the prices lower towards 840 levels in form of wave c.

The above research clearly shows how well these techniques work even in such volatile market. So this festive season we have come up with the best rates for our services which is upto 50% less rate even on Multibagger stocks, research reports and advisory tips across equity commodity and currency calls. Check Diwali offer here.

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How to trade #Nifty during such volatile movement? Time cycles perspective!

Time cycles perspective #Nifty and #stocks have been all over the places. We can expect range bound action over next few days. For detailed analysis visit https://www.wavesstrategy.com. Attend Most advanced technical analysis training in Ahmedabad. Contact us @+91 9920422202

Nifty: Capturing reversal of 250 points in just over 2 trading sessions!!

Nifty has been moving with high volatility and gaps since past few sessions. It becomes important to capture the trend from the low and ride it during such times. While many traders turned bearish when the Index made a low near 10140 we have been expecting a reversal on the upside.   

During such volatility it becomes difficult to identify the right trend and ride it. We have been successful in capturing the trend from 10480 with the help of Elliott Wave and other indicators.

Below is the chart we published in our daily report “The Financial Waves STU” which shows how we captured this reversal.

Nifty60 mins chart:(Anticipated as on 15^th October 2018)

                

Nifty60 mins chart: (Happened as on 15^th October 2018)

 

(Below is an extract of research published in our daily research report published on 15^th October 2018 morning)

Wave analysis:

In the previous trading session Nifty witnessed a gap up opening and prices moved towards higher level throughout the session making a high near 10492. In the past week  prices witnessed a huge movement within the range and we did not see any close below or above the range 10200-10480. During the last whole week we saw intense movement and Gapping action.  During such scenario it is very important to know the crucial levels and understand the reversal areas. One has to be very quick in changing stance from bearish to bullish during such fast moving markets and not be one side of the trend.

The beaten down stocks like DHFL, Yes Bank have managed to protect the important lows and showed recovery which indicates buying emerging at lower levels and also short covering. Also we are seeing positive divergence between Bank Nifty and Nifty Index as Bank Nifty was leading the fall previously but it managed to protect the lows even when Nifty formed fresh lows near 10138 levels.

On the downside now an important support is near 10200 and prices have closed above this low which indicates that we might have reversed on the upside. Buying on dips strategy can adopted but looking at volatility the Index might not provide much time and might show a strong move post which people will relate the move to falling crude prices and appreciation of INR. Also if we look at the RSI indicator we are seeing reversal exactly from the zone of 20 which was during the fall of 2017.

As shown on hourly chart, Friday’s session was an important day and we are now near the upper end of the range. Breakout above 10480 – 10500 will extend the up move further. We are also showing ROC indicator on the hourly chart which is showing positive divergence on the chart. Prices have completed wave e with the completion of triangle pattern and now the next leg on the upside might be starting. A close above 10480 one can expect follow up buying to emerge and prices are expected to move towards 10750 which is 38.2% retracement of the prior fall.

     

Happened: The Index moved as expected and made intraday high of near 10710 levels in today’s session. A novice trader might think of missing the last 30 points but an expert trader knows how to protect the profits of nearly 230 points on Nifty in just over 2 days’ of time. 

Post the sharp reversal on downside from here what is next for Nifty?

You can get access to such valuable research which is published in our daily report“The Financial Waves STU” wherein we provide views on Nifty, Bank Nifty and stocks, So, where is the big trend about to start – Get access here

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