Wednesday, July 31, 2019

Long term Diametric pattern on USDINR, what is next for this currency pair?

Diametric pattern is given by Glenn Neely as new pattern under Neo wave. This is very important pattern to understand as we are seeing it across the asset class.
USDINR has shown multi-year long Diametric pattern which is a 7 legged correction and it looks like a running Bow – Tie Diametric.
Below chart was published in the monthly research “The Financial Waves monthly update” on 9th July 2019
What is on-going with USDINR?
Figure 11: USDINR Weekly chart spot (published on 9th July 2019)
Following was published in the monthly research on 9th July 2019-
USDINR post forming high near 75 levels by the end of the year 2018, the pair hasn’t seen any momentum towards the same and drifting lower since then. The fall has been slower and in overlapping fashion from the highs of 75 and so it can be wave X. As per advanced concept of Elliott wave if the last rising segment is retraced back slower it generally results into complex correction formation involving x waves. This is the reason why we think the fall in USDINR will be limited and eventually the longer term uptrend should start i.e. INR can continue to deteriorate against USD for years to come but over short term we can see some appreciation.
This also suggests that there is no long term inverse correlation between equity market and currency since Nifty touched life time high levels near 12100 and USDINR is also near the high levels. There is short term high correlation but eventually the long term independent movement is seen in both the asset classes.
As shown on weekly chart of USDINR, prices are moving precisely within the blue channel which is working extremely well. The lower trendline support is near 67.50 levels and as long as the level of 71 is protected we can expect this pair to drift lower.
As per Elliot wave perspective, wave G of the Diametric pattern completed near the highs of 75 and the fall is in form of wave X. Till now prices have retraced 50% of wave G and further we might expect prices will retrace nearly 61.8% which comes near channel support. So post witnessing some consolidation we can see a move eventually lower towards ……… levels.
So, where is currency headed over short to medium term? Is the correlation between currency and stock market going to be established?
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Monday, July 29, 2019

MCX Copper: Catch reversals using MACD, Channels, Gap, wave pattern!

MACD (Moving Average Convergence and Divergence) is a momentum indicator that can help either in trend following or reversals as well. Just with the help of simple crossover technique you can catch amazing reversals across asset classes.
Whenever MACD line crosses above the signal line this indicates a bullish crossover, on the other hand when MACD line crosses below the Signal line this indicates a bearish crossover. However, one cannot rely only on MACD and price confirmation is also very important along with Elliott wave pattern.
Below research shows that prices have reversed from the channel resistance but we are yet to see break below the important support level which is near 430 levels i.e. the Gap area.
MCX copper daily chart:

Above is the daily chart of MCX copper and we can see the overlapping move that has been witnessed since the month of October. An amazing way of capturing reversal would have been identifying the support or resistance zones and waiting for MACD confirmation for going all in for the upcoming trend.
If we observe the MACD indicator, the crossovers have been marked with circles and after the crossovers we can see the distance increasing between both the MACD line and singal line, confirming the emerging trend.
Also the recent price action is similar to what we observe in the past. However, it is important to wait for prices to break below the support level provided by the Gap area near 430. Move below this might result into a quick move on downside which is also confirmed by indicator. On upside 460 is important level to watch and break above the same would provide positive trade setup.
In a nutshell, Copper is at crucial juncture and break of either above 460 or below 430 will provide good positional trade in that direction. This shows how to use indicator along with price confirmation and not just rely on indicator crossover that majority of the traders do resulting into losses.
You can also read the earlier research on Silver that we were able to capture for nearly 7.5% move. You can read it  here.
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Monday, July 22, 2019

Nifty: How to trade using Bollinger Bands® and Moving averages? Amazing chart

Bollinger Bands, Moving averages and patterns if applied correctly can provide amazing trade setup and can indicate starting of a trending move which can be useful for intraday traders as well as swing traders.
We use any and every technique that carries ability to provide good trade setup. Elliott wave and Neo wave are advanced concepts of technical analysis but by using patterns, Bollinger bands and Moving averages as well one can derive very prudent trades. Look at the below chart of Nifty with the applied methods:
Nifty hourly chart:

In the above chart you can see clear patterns. The first pattern is the wedge shaped upward sloping pattern. During the formation of this pattern the Bollinger bands continued to narrow down thereby providing squeezing behavior and later on there was a big expansion. This was the confirmation that a strong trending move is emerging. Also during trending move on downside we can clearly see that prices continue to move between the lower end of the bands and also the 10 days Moving average.
Similar development was seen later when Nifty formed a Flag pattern. Break below this pattern was again associated with strong trending move on downside along with Bollinger bands expansion and prices clinging towards the lower end of the bands and the moving average. It is only on break above the moving average we get an indication that the down leg is over and retracement is starting.
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In the latest training on Master of Technical analysis (MOTA) held on 20-21st July many such methods were discussed with very specific rules that can be followed immediately which will help increase in taking some amazing trades. Even the stock selection algos were created.
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Tuesday, July 9, 2019

Maruti: How far will it fall?

Maruti once was among the top performing stocks in the Auto sector but post making a high near 9929 levels in July 2018, the stock failed to sustain and witnessed a sharp fall failing to show any recovery.
An important support zone near 6300 levels was seen but the same has been now broken decisively. Auto stocks have failed to show any recovery and the rallies have been short lived.
Below is the chart with detailed analysis and the move witnessed has been in sync with our counts.
Maruti Daily Chart:

Maruti witnessed a sharp fall from the high of 9929 levels till 6440. Prices traded near the zone of 6300 – 6440 for many months but this is now given away over past two days. The same zone which acted as support will now act as strong resistance. So unless we see move back above 6440 levels the outlook for the stock will remain bearish.
In the last session prices finally managed to break below the support on closing basis and since then has been moving lower and lower. Now as long as we do not see a faster retracement of the fall the trend would remain negative.
This simply shows how amazing simple horizontal support or resistance works and it can help in capturing reversals just by using such simple techniques.
From wave perspective, prices are currently moving in wave iii of (c) which might be forming an Ending diagonal pattern. It will be only post completion of 5 waves down we can see recovery in this stock. The stock has now corrected nearly 40% from its life time high levels of 10000 and we will hint it in our daily research once a faster retracement back above important resistance level is seen.
We have been publishing about this stock with detailed analysis in our daily equity research report published under the name “The Financial Waves STU”. Subscribe for the report and get daily updates of Nifty with three stocks before market opens and make the most of it. Get access here
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