Nifty Elliott wave counts and trading strategy!

Nifty Elliott wave counts and trading strategy!

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty sharp movements on either side have provided very good trading opportunities. Intraday volatility is good for intraday traders but might be painful for positional traders as there is no net progress over few days.

In current market environment one has to be dynamic and switch between positional to intraday trades. Below article gives an overview of what we mentioned in our daily equity research report“The Financial Waves” and price movement with important levels.

Nifty 60 mins chart: shown on 14^th March morning before market opened

Happened as on close of 14^th March 2013

We mentioned on 14^th March 2013 morning report, “As shown on 10 mins chart, the move down from 5971 does not look impulsive and is contained within the red channel so far. Assuming that this channel will remain intact we can expect short term bounce back from near 5820 levels…”

Happened on 14^th March:Nifty moved exactly as expected. Prices moved down towards 5800 levels and moved below it but only momentarily and quickly recovered from the lows. It took the support of the red trendline shown on the 60 mins chart and bounced back steeply from there. We have shown a very similar path for Nifty in the previous update.

Mentioned in morning on 15^th March before markets opened:The current 60 mins chart, indicates the short term direction. After the sharp movements on either side over past few days prices can take a breather now and consolidate within a narrow range before moving higher towards 5935 – 5940 levels. 5940 is not only 80% retracement of the entire down move from 5970 to 5791 but also is the area of previous x wave which has always proved to be important turning points….

In short, Nifty can consolidate for next 2 days between 5870 – 5940 and should later resolve ……..

Happened today so far:Nifty made a high of 5945 and a low of 5862. Prices are currently 5892. Nifty has moved very close to the range we have mentioned.

Do not get panic with increase in volatility and wide swings. This can equally work in your favor provided important supports, resistances and strict stoploss methods are followed.

“The Financial Waves” daily research report is not necessarily for short term traders but also gives medium term perspective to markets. We do switch from short to medium term strategies based on market dynamics and clearly advise our subscribers about it. Also mentioned in today’s report our view on RBI monetary policy and how do we expect markets to react…

For Subscribing write to us at helpdesk@wavesstrategy.com or call us on +91 9920422202/+91 22 28831358 or visit www.wavesstrategy.com

Nifty: A classical Fractal Nature!

Nifty: A classical Fractal Nature!

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Fractal Nature: We have mentioned below Fractal concept on 25^th July 2012. We are re-visiting that concept to explain the latest Fractal nature seen on Nifty.

Today’s morning equity research report published before the market shows latest example of this Fractal nature. Read ahead to know more about Fractals and its implications:

We, at Waves Strategy Advisors, believe in the theory that freely traded markets are patterned and exhibits fractal nature. This makes them behave in a predictable manner. By pattern we mean that there are certain structures that repeat itself from time to time and can be seen on charts that shows prices of any tradable instrument. The “Fractal Nature” is again an important concept which states that these repeatable patterns occur on varied time scales and can be seen on 1 minute charts to Daily charts to Monthly charts. Fractal structure is seen in nature across from DNA to snowflakes to galaxies and so it is also seen in stock markets which reflect collective emotions and social mood of humans.

Humans behave in a manner, when given a stimulus, in similar and probabilistically predictable fashion. This behavior of acting in similar ways makes us no different than the other creations of nature. Freely traded markets are the only sources that reflect the collective behavior of humans and the current social mood. Highly liquid markets cancel out the random events and what is left is the social mood of the mass and that indicates what we can expect in the future. We believe that any freely traded markets like Equities, Forex, Commodities move in the form of repeatable wave patterns that exhibit fractal nature at various degrees. This behavior was first observed by Ralph Nelson Elliott in1930s and was later revisited by Robert Prechter in 1980s. This study of waves is now famously known as Elliott Wave.

We identified this important Fractal formation in Indian stock markets on 13^th March 2013.

Nifty exhibits a classical fractal nature with prices showing similar pattern on 60 mins chart and 10mins chart. This is highlighted above which shows a clear double zigzag pattern (a-b-c-x-a-b-c) involving x wave that broke out of the channel at the centre of the trend. After completion of this pattern on 60 mins chart we can observe a sharp reversal on upside from 5664 levels and if prices are indeed following the fractal development to high extent we can expect similar path but of lesser magnitude since currently it is seen on 10 mins degree compared to previous 60 minsdegree. This further conforms to our path shown on 60 mins chart. Such developments are indeed a thrilling experience and are exactly the reason why patterns like triangle, wedge or H&S that work on daily charts work very well even on smaller degree charts… Let see over next few days if we are reading the market pulse correctly!!!

Subscribe to the daily equity research report and see yourself the combination of different concepts and wave theory to get high probable trade setups and crucial levels. For Subscribing write to us at helpdesk@wavesstrategy.com or call us on +91 9920422202/+91 22 28831358 or visit www.wavesstrategy.com

Nifty continues to move as per path ahead!

Nifty continues to move as per path ahead!

By Waves Strategy Advisors. To subscribe to daily research on Indian equity markets visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Five reasons why we were bearish on Indian Equity markets when Nifty was trading in the zone of 6050 – 6100 in January 2013!

As per advanced Elliott wave concept, no part of wave 3 should break the 0-2 line or else wave 3 should be considered over or wave 2 will be still ongoing. Now as shown on 60 mins chart, chances of wave ii is still ongoing in form of running correction is extremely less as wave ii has already consumed time more than 3 times wave i. So this leaves with only scenario that wave iii is over and wave iv is ongoing.

RSI has now confirmed negative divergence as shown on daily chart. All important tops or bottoms mostly form with negative divergences. Also as wave iii is showing strong negative divergence, chances are high that an Ending diagonal in 5^th wave is being formed and one minor push on upside will give triple divergence on RSI.

69 days Time cycles that we use to predict probable bottoms and tops (shown on Sensex before) confirms with wave counts that prices are due for a top.

Prices have so far retraced around 78.6% of down move from top of November 2010 near 6300 to the bottom at 4550 levels. We have seen before that this retracement level has proved extremely important for Indian markets.

We were aware about the few of technical reasons even before but what has changed since 1 day before is the break of 0-2 line on closing basis which happened yesterday. This rules out the probability of wave iii of 5 of C being an extended wave and keeps only 1 highly likely scenario of Ending diagonal being the most probable scenarios.

As we have mentioned before past 100 points of rally on Nifty has been sufficient for turning the sentiments extremely bullish with targets of 7000+ forecast by many brokerage houses and analysts. The final minor vth leg on upside will be sufficient to turn even more people on extremely bullish side over next 1 to 2 weeks. We will see this as negative sign.

Currently one minor leg up in form of wave vth is forming which can go towards 6050 i.e. 61.8% of wave iii or maximum 6100!

Nifty Daily chart:

Anticipated on 11^th January 2013: 

Happened:

Wave analysis:

We have been precise in capturing the top for the Indian Equity market. Prices have formed top at 6111 on 29^th January 2013, thereafter it has breached the wedge pattern (Ending diagonal pattern) on downside and moved lower till 5663. 5650 is the support level which was shown on11^th January 2013 report and recently prices reversed exactly from near the support level of 5663 and moved higher.

In the previous report we have mentioned strong resistance of 5970 level and prices have made high of 5971 and at present consolidating below the resistance level.

Combination of simple technical analysis, momentum indicators, Eliiott wave theory and Time Cycle helped us to predict the short to medium term movement objectively.

Do not get carried away in euphoria or news as they are the reaction after market movement. To know the next big trend of Nifty subscribe to our daily equity report (The Financial Waves short term update). For more information visit www.wavesstrategy.com or write us at helpdesk@wavesstaregy.com or call us on +91 22 28831358 / +91 9920422202.

Nifty took a "V turn" Look reaction at 5970 levels!

For more information on daily research report visit www.wavesstrategy.com or write at helpdesk@wavesstrategy.com

Bottom Line: Nifty had another Gap up opening on Friday. The short term trend remains positive.

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “In short, the near term trend is positive to sideways. A move below 5800 will provide first confirmation that the downtrend has resumed. The current scenario remains valid as long as 5960 is not broken on upside.”

Nifty continued to show Gapping action on upside. Prices managed to open near 5884 with approximately 20 points gap up and started to pick up steam during second half of the trading session. Prices made a high of 5953 and closed near the higher end of the day. This continues to maintain the short term bias as positive.

RSI as shown on daily chart touched the level of 30 which was last seen in May 2012 before start of wave C from 4670 levels. This is another indication that the market dynamics that was valid from 4670 to 6110 has changed and the bigger trend has turned to down. However, we will not be too stubborn & will wait for prices to break below 5795 to confirm resumption of bigger downtrend.

As we keep mentioning, wave x normally provides important turning points or resistance to prices and prior wave X as marked on 60 mins chart comes near 5960 – 5970 levels. We will be closely observing how prices react from here. A decisive close above this zone will open up possibility for a move towards 6100 levels.

From wave perspective, the up move from 5664 levels has good momentum and is along with Gaps which is a typical characteristic of an impulse wave. However as seen on 60 mins chart, the move so far is perfectly channeled and contained within the blue trendline. A perfectly channelized move has higher chances of being corrective and not impulsive. Therefore we have conflicting signals and currently we have shown 1 plausible scenario as a-b-c with wave c = wave a at 5970. Prices are also near the upper end of the channel which should provide some resistance. 61.8% retracement of entire down move from 6110 to 5664 is placed at 5943 level where Nifty has closed.

In short, the near term trend remains positive but prices are near cluster of resistances which atleast should result into short term sideways action if not down. Such cluster of resistances if has to be taken out should be with a gap. Only a close below 5890 will indicate that the short term trend is probably changing from up to down. However a decisive close above 5960 – 5970 will continue the uptrend. 

For more information on daily research report visit www.wavesstrategy.com or write at helpdesk@wavesstrategy.com or call on +91 9920422202

BUDGET and MARKETS – Nifty!

BUDGET and MARKETS – Nifty!

By Waves Strategy Advisors. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Budget was a non event for us since the trend which was originally down resumed as soon as it was over!

We mentioned in previous update on 27^th March 2013, “On account of Budget there can be increase in intraday volatility but the closing will be important. Events can produce short term spikes or change of trend but that will be only momentarily and the major trend eventually resumes. In short, the trend continues to be down with important resistance lying at 5850 on closing basis and any move back below 5750 will indicate that the short term consolidation is over and the downtrend has resumed.”

The last bar shown in below chart clearly explains what happened on the day of Budget…

Nifty Weekly chart:

Wave Analysis:

Following is a part picked up from “The Financial Waves” equity research report published today morning before equity markets opened..

Nifty had a gap up opening of around 40 points on back of strong reversals on upside in global markets. The high made during the day was 5849.90 which was to the point of the resistance of 5850 mentioned before. If events or external events would drive the prices then such respect for important levels would not have happened. Markets started moving down during the budget session itself and the major trend which is currently down resumed a little while after Budget was over. You might see headlines in today’s newspapers mentioning that “Budget fall short of expectations” which spooked the markets but Budget was over by around 12:50 pm and market was still in minor green by 1:14 pm. If Mr. Chidambaram was responsible for no clear steps to induce growth and reduce deficit then there should have been sharp fall by the end of Budget session. However the selloff was seen after a delayed time which was nothing but resumption of original trend. Case in point: It is the perception and social mood of the crowd collectively that moves the market and Elliott wave helps us to evaluate the probable paths we can expect.

Currently, prices made a low of 5672 on intraday close to the first target of 5650 we have been mentioning all the while. An important thing to observe is that each of the falls that made into the 100 points list has been increasing. For momentum to slow down we would expect the size of the bar should reduce but we are seeing increase in the momentum and price range on downside. Yesterday’s fall was one of the biggest on intraday as well as closing basis. This indicates that ……….

Our subscribers have been able to catch the entire move right from the top near 6050 – 6100 to current levels of 5675. There is still more to it. You can take your own informed decision by looking at the charts and explanation given in the daily research report “The Financial Waves”. For more details write to us on helpdesk@wavesstrategy.com or visit www.wavesstrategy.com reach us at +91 22 28831358 / +91 9920422202.