Wednesday, November 20, 2019

Nifty at crucial juncture! Which side will it take off? Average True range with Elliott wave

Nifty and Bank Nifty had been inching higher but the momentum has been very slow and it has been hitting the wall zone!
Below chart shows the multiple red trendline that meet at the same intersection. Multiple trendline intersections are very important areas and one need to keep a close watch on price behaviour from there. A decisive break above the intersection zone will be bullish whereas move back below the support area will indicate prices got rejected at higher levels.
Nifty 60 minutes chart:

Average True Value (ATR) is a classic tool to measure the overall daily range of the market. ATR is calculated by taking difference between the highs and the lows, today’s high compared to previous close, today’s low compared to previous close and taking the average over the period of time. 10 days ATR value of Nifty has cooled off from 200 points to nearly 118 points now. This is classical indication that option buyers need to be cautious and markets might start consolidation or non trending behaviour. So, buyers will have to consider buying in the money options else there will be deterioration in the prices despite of the market moving in expected direction.
The sharp fall in ATR can be seen from the above chart which has now reached towards the nominal value.
In a nutshell, one needs to combine various methods together to form trading strategy. Above chart shows, Elliott wave counts, Trendlines, Channels, Average True Range (ATR) and Moving averages. It will now be important to see if prices can manage to break above the earlier highs to generate necessary momentum for further positivity or start giving up from here trapping the buyers! It is time to be alert and not complacent. Next few days will be extremely crucial.
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