Elliott wave is GPS of the market and gives the path prices
can probably travel.
Nifty has been moving in lacklustre fashion over past few
days but with high volatility. We have shown the Neo wave counts along with ROC
indicator.
Nifty hourly chart:
The entire structure on downside looks like Expanding
pattern and we are yet to break above 18210 followed by 18250 levels which is
immediate hurdle.
Prices also found support near 50% Fibonacci retracement of the entire rise.
ROC indicator: As
can be seen in ROC indicator we are witnessing reversals between 1.61 and -1.69
levels. ROC is finding support near 0 line but is showing slower momentum as
compared to the earlier bounce we saw from wave c. This suggests upside
movement is slower and can be therefore wave d of Expanding pattern or probably
running Diametric.
Diametric pattern – is
a 7 legged corrective pattern with expansion followed by contraction later.
This is known as Diamond shaped Diametric pattern. This is only an assumption that
prices might be forming this structure and one needs to get signal as per two
stage confirmation technique of Neo wave
with support near 18080 followed by 17980 levels.
In a nutshell, it
seems we are in wave d of Diametric
pattern. Now that the probable pattern is known, one can focus on price
action using smaller time frames two
stage confirmation technique of Neo wave to enter prudently at good risk
reward ratio. Thus a complete trading system can be formed using Elliott wave / Neo wave method.
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