Advanced Elliott wave – Neo wave helps to understand the overall maturity of the trend and provides the probable path prices can follow.
It is important to combine the application of wave theory
along with price action for a clear trade setup and to stay objective.
Nifty Neo wave daily
chart with Hurst’s Time cycles:
Elliott wave
analysis:
As shown on above chart, prices are moving with high
volatility since the top was formed near 21118 but moving in a broad range.
The movement on intraday basis has also been wild and it is
important to combine the wave patterns with simple 3 rules of price action to stay objective.
As we can see in above chart post completion of wave (e)
there was sharp decline on downside that hinted for possible completion of the
up move and reversal on downside in form of wave (f). This wave (f) is supposed
to be similar to that of wave (b) and show both price and time correction.
We can see that Nifty have been failing to show price
correction since past few weeks but is showing time correction. This keeps the
possibility still open that the downside move in form of wave (f) has started
which might be possibly in Diametric pattern.
To ride the downside reversal we now need to see a faster
retracement of the last rising segment which is from the lows of 21530 levels
on short term charts or a reversal as per the 3 candlestick rules can be an
early warning for prices to move back on downside.
Any breach above 22055 followed by 22118 will increase the
possibility that wave (e) is not over but will take prices up trapping late
entrants and then reversing back on downside. Given the recent price action
this possibility has now opened up.
Hurst’s Time cycle – As
per the concept of Time we are now near 75% if the cycle period. This is also
the reason we are not seeing strong positive behaviour as time is not in sync
for positive momentum yet.
In a nutshell, Nifty
is now near the cusp with acceptance above 22055 to open the odds for wave (e)
to continue whereas reversal on downside as per the 3 candlestick rules will
indicate downtrend. These are times when just two days of more price action
will confirm the pattern under formation with utmost clarity!
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