Canara bank: Combining Diametric Pattern with Ichimoku cloud

Elliott wave helps us to catch big moves and if we combine it with simple price action then it is possible to form powerful trade setups.

We published the following article on Canara Bank pre-market on 26^th April 2023 in "The Financial Waves Short Term Update" which our subscribers receive pre-market every day.

Canara Bank Daily chart as on 26^th April 2023 (Anticipated)

Canara Bank Daily chart as on 26^th April 2023 (Happened)

Canara Bank Daily chart as on 3^rd May 2023 (Happened)

WAVE ANALYSIS:

In the previous session, Canara bank opened on a flat note and during the day showed a good buying. At the end of the day prices closed with a decent gain of 1.57%.

On the daily chart, we have used Exponential moving average of 20 and 40 period. As we can see that EMA positive crossover has happened which is a positive signal. Along with this, price action is must to confirm the same. Also, prices are currently trading near its previous swing high which was near 314. Let’s see if we get a breakout or reversal back from it.  As per wave perspective, c looks to be completed on the downside. However, we need a follow up action to confirm the same. 

On the hourly chart, we have used Ichimoku cloud to understand overall price direction. As we can see that Prices are moving up by taking support of the base line (red). This suggests that any dip towards the base line i.e. towards 301 can be used as a buying opportunity. Prices are following a classic Diametric pattern, Wherein, last leg of the pattern is unfolding on the upside in form of wave g.

In short, Canara Bank looks sideways to positive. Use dips as a buying opportunity for a move towards 314 as long 298 holds on the downside.

Happened:

The wave counts have helped us to predict this move well in advance. After we published the report on 26^th April 2023, the price kept moving higher and hit our target and recently made a high of 321.55.

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Nifty: Moving Average difference indicator to identify change in BIGGER TREND!

How to use Moving Average difference indicator to identify that the existing trend has reversed?

Below article focused on application of indicators and what does it indicate from medium to long term perspective -

Nifty had another positive close yesterday after a small correction on intraday basis. Majority of stocks continued to move higher and a few stocks like DLF, TataSteel, SBI looks like giving a strong positive break after brief consolidation. As mentioned in earlier updates one should avoid catching a top in current market and surprises will be on upside.

Nifty daily chart:

Following explains why this time the uptrend is different than that seen previously during the fall of 2015. As shown in first daily chart, the momentum so far is strong and rise of such magnitude without any meaningful retracement was not seen during the entire period of down trend that started in March 2015.

Difference of Moving average:The difference of Moving average indicator shown below the price chart has managed to decisively cross above the resistance blue line thereby indicating that the momentum is much stronger this time compared to the previous rise. Also there is still room on upside as the extreme reading seen just before the downtrend started was 270 and the difference of average currently is at 168.

Volumes:Volumes have continued to stay above normal during the entire period of 2016 and Nifty is now at the level seen in December 2015. This above average volume indicates buying interest and accumulation which increases the odds that there can be a positive breakout …………

From wave perspective we are still keeping the possibility open that the current up leg is either wave ……. or wave ………..

“The Financial Waves short term update”is our flagship product that covers detailed technical analysis along with charts and explanation using Elliott wave, Time cycles, combination of indicators. We have been accurate in capturing a top near 9119 in 2015 and now the bottom near 7000 made in February 2016 end. Staying against the crowd when it is most required is possible only by using the objective techniques that we keep publishing in the daily research report. For subscription options visit Pricing Page.

Nifty: How applying Time cycles, Indicators and Elliott wave helped us capture the top?

In our monthly research report “The Financial Waves Monthly update” we have warned our subscribers exactly at the time it was needed most. 

It takes lot of courage and belief in the techniques you follow to stand against the crowd when the euphoria is at its peak.

Go ahead and read below the various different techniques we applied that all pointed out that the uptrend in Indian equity markets and Nifty was a “risky affair”and not worth the drawdown which might happen…

Figure 1:Nifty weekly chart

Happened:

Following is a part of research report published in our “The Financial Waves short term update”Read yourself why we turned bearish at the time when the majority had been bullish exactly at wrong time!

Indian markets have continued to touch new highs in the month of November. The high made in November was at 8617 and December also started on positive note with prices touching 8627 on 4^thDecember. November was more of an upside drifting movement with the trending move not lasting for more than two days even on upside. There has been lot of euphoria being created every time prices touches new highs but it is crucial to also acknowledge the fact that everytime a new high istouched the broader market has failed to confirm.

Advance Decline line:The best indicator to measure how the broader market has been performing is the Advance decline line. (shown in actual research report) above shows the red line which is the AD line. It has been constantly forming lower highs and lower lows and in November as well there has been a sharp down move.  AD line touched the level of -2000 which was previously seen in mid of May. So this up move which has been on lot of euphoria and optimism is not supported by the broader market.

Figure 1 shows Nifty weekly chart along with 84 weeks Time cycles.This cycle is a part of Hurst cycle itself shown previously but only on a broader frame. Any correction can either happen in sideways formation or downside (assuming prior trend is on upside). The correction seen from in 2008 was sharply on downside and the low was formed near the cycle low date. The next correction was in sideways formation as prices simply oscillated within a range from October 2009 to May 2010. The next set of correction in 2011 was again on downside followed by sideways correction in 2013. If the pattern of alternate type of correction between sideways to downside is valid and still working then we should indeed see a downside correction going forward.

Monthly Bar technique: Now let us look at the Monthly bar technique to understand the crucial support zones. …..

Commodity crisis: The current research is focusing on the commodity markets and global commodity stocks given the fact that this time the risk has drastically increased for companies or stocks that trade in commodities and even for commodity producing countries. A sharp rise or fall results into eventualities that are difficult to predict beforehand and looks obvious in hindsight. Sharp fall in Crude Oil prices along with commodity producing companies worldwide is hinting towards the increased risk in this asset class. A strong trend will ignore the actions of government or decision makers and we have seen the example of 2008. If Crude prices continue to strongly trend on downside, even the output cut by OPEC will be futile in changing the trend of commodity which will then put lot of pressure on companies directly or indirectly linked with production or refinement of Crude oil.

In a nutshell, looking at the overall breadth, momentum and sector participation we continue to look at the current uptrend as a risky affair…

In our short term research report on 8^th December 2014- In short, Indian markets continue to trade at crucial levels and a trending move is due now. It is better to await either a close below 8500 followed by 8430 or above 8627 which is the spike high for confirming the direction of trend.Indicators and other methods have been showing absolute loss of momentum but it is prudent to wait for prices to confirm which it should in this week!

In our short term research report on 9^th December 2014- In short, lower highs lower lows formation on short term chart, bar technique and Elliott wave theory suggest weakness to prevail in Nifty. On upside as long as 8590 followed by 8627 is intact trend will remain bearish. Close below 8430-8420 levels will be important to continue downside correction.

So if anyone have doubts whether the current fall was predictable amidst the optimism and euphoria using objective techniques the above research reports are much more than the evidence to prove the validity of technical studies and Elliott wave theory we have been following!

Nifty has broken below all important supports but is this right time to enter fresh short positions? We do not think so as Risk – Reward is not favorable. So what should be Trading or Investment strategy?

Subscribe to the Monthly and Short term research reports “The Financial Waves” and get detailed insight into the crucial levels along with Elliott wave counts, applied technical studies and much more, Speak with our research desk for any doubts! I am conducting a 2 days online training course on Elliott wave and will discuss various methods used for catching the recent top. To attend the training get in touch with us at   helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202. Visit www.wavesstrategy.com

Nifty: Money Flow index warning sign! Price confirmation still awaited!

Bottom Line: Mr. Rajan continued to surprise the Bond traders by keeping rates unchanged despite Bond yields easing!

Nifty daily chart:

 Nifty 60 mins chart:

Wave Analysis:

Mr. Rajan continued to act stringent to curb inflation despite the peer pressure and kept the key rates unchanged. The bond trader was caught off guard as the easing bond yields did not help in rate cuts. Since Mr. Rajan has taken over the bond traders are continued to be surprised. Trust me once we see fall in equity prices, RBI will be forced to take steps cutting down interest rates. As falling equity prices is a mirror of how economy is going to perform few months down the line. Looking at current scenario there is a possibility of first rate cut to happen in February 2015.

As soon as the policy decision was announced, Nifty entered into green territory atleast momentarily. This only showed markets have been waiting for news irrespective whether there will be rate cut or not. The index made a low of 8504 and traded in the range of 8540 and 8510 for most part of the day.

An interesting observation is that during the entire up trend from 7723 to recent highs there have been maximum of 2 consecutive red bars formation. Infact, in the entire up move from 5960 made in February there has been only a few times when there were consecutive 3 red bars and each time this resulted into increase volatility or deeper retracement either in terms of price or time. So far prices have formed 2 red bars and it will be crucial to observe whether Nifty can manage to close above previous close today or not.

Money Flow index measures volume along with price momentum. It indicates if money is flowing in or out of the index. It essentially a volume weighted momentum indicator. As can be seen on daily chart there is a strong negative divergence when this indicator is making a lower low against prices making new highs. We have highlighted previous such instances that resulted into atleast temporary halt in uptrend if not a strong downside correction. A break below 8460 is important for deeper downside retracement. However, it will be crucial to watch the 30 levels on Money flow index since everytime it reached there, prices bounced back on upside. First thing first, it will be crucial to observe if Nifty can manage to protect the level of 8460 and bounces back on upside in form of wave (v) of v of c. This wave counts will remain valid as long as 8670 is not taken out on upside else we will be forced to end wave (ii) of v at yesterday’s low in form of irregular Flat correction.

In short, Nifty has continued to trade in a challenging environment and no clear trending direction. Move below 8460 followed by 8430 will be bearish whereas close above 8560 is necessary for positive trend to resume!

Subscribe now for the daily research report "The Financial Waves short term update" and see yourself why Indian markets are at very crucial juncture. The daily morning research will give insight in stocks and other indices as well. For subscription options visit http://www.wavesstrategy.com/index.php/store.html 

How to apply MACD, Time Cycles, DMI indicators on stocks?

In technical analysis there are more than 100 indicators that can be used and applied on stocks. 

But trust me most of the indicators gives similar output. It is better to stick with 3 to 4 indicators that you are most comfortable with and understand it completely. Many of the books and if you search online using Google search will give you very crude way to use these indicators for simply overbought or oversold conditions which are wrongly pre-defined as 70 and 30 levels on RSI. The reason I say these levels as incorrect because during strong bull trend RSI will easily reach 80 to 85 levels and during strong down trend RSI reading of 20 is fairly common. For optimum use of RSI try to see the levels from where RSI has turned previously or in short which level is acting as support and resistance – in a similar way we identify supports and resistances for stocks.

The below article highlights on how do we combined indicators like MACD, Time Cycles and advanced concepts like Directional Movement Indicator. The complete strategy is not revealed which is mentioned in today’s morning research report.

Kotak Bank Daily chart:

Wave Analysis:

As shown in Daily chart of Kotak Bank, since mid 2011 prices are well intact in the upward moving channel. Recently in mid June 2014 prices broke above the channel resistance near 910 levels, made a high near 960. But, after that prices were unable to sustain above the same and showed sharp down move in last few trading session. This down move has broken the black color channel support which was intact since start of 2014. This is suggesting that short term top is in place for Kotak Bank. We have applied various other tools which are giving warning signs at current level that up move from ……. is in danger.

Directional movement index (+) in blue color and Directional movement index (-) in red color is working very well. In the past we observed that whenever blue color line moves above red color line  prices showed strong move on upside on the other side whenever blue color line moves below red line prices have showed down move. In simple terms, crossover of blue and red color line is providing signal for buy and sell. At current level, ………

MACD: This indicator is showing negative divergence and also the red line has crossed below signal line. What does it mean?Indicators are suggesting weakness but is it right to take the trade based on Indicator? Absolutely not! It is imperative to look at price charts of shorter term duration to get good entry or exit levels along with Risk Reward ratio.

Time Cycle of 96 days: is working well to find out the top and bottom.

A detailed 120 mins chart is also shown in today’s morning report for Kotak Bank.Looking at short term indicators with crucial price levels is the key for successful trading and timing the markets.

To know what is next from here subscribe “The Financial Waves short term update” –a flagship product that covers Nifty and 3 different stocks on rotational basis, complete charts, indicators, applied Elliott wave and much more. The reports will be delivered daily in your mailbox and can also be accessed online. Visit http://www.wavesstrategy.com/index.php/store.html for pricing options.

Nifty: TRIN indicator, Elliott wave, Time cycles path ahead

Bottom Line: TRIN indicator shows lot of volume already gone into short side without producing any meaningful correction confirming that 1 leg is pending on upside.

The below research is picked up from 23rd June 2014 morning research report of "The Financial Waves short term update" by Waves Strategy Advisors. For daily view on Nifty and 3 different stocks with complete Elliott wave counts, Time Cycles, combination with indicators like RSI. For subscription visit http://www.wavesstrategy.com/index.php/store.html

Nifty daily chart: (as of 23rd June morning research report)

 

 Nifty 60 mins chart:    

Chart courtesy: icharts

Announcement:

Upcoming Event in Mumbai on 12-13 July 2014

Elliott Wave- Its combination with various Indicators along with Time Cycles from the experience of Ashish Kyal,CMT

For details please visit http://www.wavesstrategy.com/index.php/training-on-elliott-wave-high-probable-trade-setups.html

Existing subscribers can avail 10% discount for registration

Wave Analysis:

In previous update we mentioned that “In short, it has been almost 9 days of correction so far and a trend is due to start. Faster move above 7600 will provide 1^st positive confirmation for a move towards 7800...”

Nifty continued to show weakness on last day of the week and closed below the previous week’s low near 7510 levels. The trend has been range bound in entire last week and the correction has already taken 10 days now. We continue to believe that one leg on upside is pending which will complete the ongoing move from 6630 levels.

As shown on daily chart, it seems the entire of the current up move is probably wave c or wave 3 which is subdividing into 5 waves. Either of the scenarios is indicating that wave iv is ongoing and once it is complete we should see wave v towards 7800 levels. This wave v will also lead to negative divergence on daily RSI which will further confirm short term topping process. The probable path over next few weeks is shown above but it is prudent to wait for price confirmation above 7600 for a move towards 7800 levels. Also near those levels we will have to closely watch the momentum and overall participation. If it is strong the current leg can extend further but if the overall breadth continues to deteriorate it will indicate a final wave v before we move down back towards 7400 – 7250 levels. The ongoing structure also looks like a wedge shaped formation with each of the up legs getting smaller. Again, development of wave v will provide vital clues & confirmation to this pattern.

Coming to short term, wave iv is ongoing in the form of double corrective pattern enclosed within the red channel. Prices are on verge of completing wave c of iv and a faster retracement above 7600 followed by 7650 will confirm that the low at 7500 is in place.

TRIN indicator measures in which direction volumes have been moving and whether the conditions overbought or oversold. We can clearly see that this indicator is at the level last seen only in September 2013 before the rally started. This indicates that lot of volumes have already moved to short side but did not produce any meaningful correction. The indicator is now in oversold zone (it is opposite compared to RSI) and some relieving action is accepted. This will result into an up move from current levels on Nifty and down move on TRIN.

In short, the indicators and other parameters are suggesting that the correction should complete and we should see an upsurge in Nifty but the confirmation of the same will be obtained only above 7600 levels. On downside 7480 will act as an important support and break below it will extend the current correction towards 7450 – 7400 levels.

For daily view on Nifty and 3 different stocks with complete Elliott wave counts, Time Cycles, combination with indicators like RSI. For subscription visit http://www.wavesstrategy.com/index.php/store.html