Video on Nifty, Bank Nifty using Elliott Wave by Ashish Kyal on CNBC TV18

The above video explains current state of Nifty, Bank Nifty, stock tips over short to medium term horizon. For more details on various research reports and Intraday / Positional ideas visit www.wavesstrategy.com or contact on helpdesk@wavesstrategy.com

Capturing the carnage in Banking stocks!!

The first week of January 2016 was painful for Global Equity Markets wherein Indian Equity Markets lost almost 5% in a week. Banking stocks were the worst hit by the down move. Bank Nifty lost more than 1100 points in 6 trading sessions. We were cautious on the Indian Equities from the end of December 2015 and suggesting shorting opportunity on various stocks through “The Financial Waves Short Term Update”. We were able to capture the fall in Yes Bank and part of the same is shown below:

Yes Bank 60 mins chart: (Anticipated in the morning of 1^st January 2016)

Yes Bank 60 mins chart: (Happened on 7^th January 2016)

(part of research taken from “The Financial Waves Short Term Update” published on 1^st January 2016)

Wave analysis:

“prices have been intact in downward moving channel. As per wave perspective, stock has been forming Complex Correction pattern and intermediate wave y of the same is ongoing. Prices have reached towards channel resistance along with 30 weeks Exponential moving average and hence price action of next few days will be crucial to observe. Stock has given close below prior bars low after 11 trading sessions which is suggesting negativity.”

As shown in 60 mins chart, prices have reversed from the channel resistance along with 61.8% retracement of the prior down move. The down move of last session has also broken upward moving channel. Now move below 710 will provide further confirmation that minor wave b of intermediate wave y completed and next leg on downside in form of minor wave c has started.

In short, Yes Bank has reversed from the crucial channel resistance. Move below 710 will take prices towards 680 level where area of minor wave a is placed.

Happened: Yes Bank moved in lines with our expectation. Post Breaking 710 level prices have made low at 675.70 level on 7^th January 2015 and achieved our target. Bank Nifty is now very close to the low made of 15760 in the month September 2016.So what should be the trading strategy now for Banking stocks?

Subscribe to “The Financial Waves Short Term Update” and get in-depth research on Nifty and 3 stocks where short term trading opportunity exists. For more information visit Pricing Page

Nifty strong selloff: Power of 49 days Time Cycle!

Global Equity Markets has showed sharp fall in current week on the fears of slowdown in growth of China. Today was the 2nd trading session in this week where Shanghai Composite moved lower and closed down with 7% loss. This is the justification for the current selloff in Indian Equity Markets however based on Advanced technical concepts from the last week of December 2015 we were maintaining our cautious stand on Nifty due to slower nature of rally. Along with all this we also use Time cycles to time the market. Timing the market is very important from trading as well as investment perspective. Below we have shown part of research taken from “The Financial Waves Monthly Update” published on 5^th January 2016.

Nifty daily chart – 49 days Topping Cycle and Bollinger Bands

(Part of research taken from “The Financial Waves Monthly Update”)

49 days Time cycle: We have seen bottoming Time cycles working very well but at times it is important to look at the Topping cycle as well. This 49 days Time cycle is shown on Nifty daily chart. We have been using this topping cycle for many years now and it has produced the desired outcome most of the time. As per this important tops are formed every 49 days and we can clearly see the top of August 2015 post which there was severe selloff which was also formed on this cycle day. After 3 months we have seen a fall of more than 150 points on Nifty on 4^th January 2015. This indicates short term bearishness for few days.

Post forming to at 49 days Time cycles, Nifty did not look back and selloff is still ongoing. Now question arises still how much pain is left? Nifty is approaching towards the low of 7550 formed in early part of December 2015. What is next?

Subscribe to “The Financial Waves Monthly Update” which is published now for long term forecast and to know the short to medium term trend subscribe to “The Financial Waves Short Term Update” . For more information visit Pricing Page

Shanghai market crashes another 7%. What to expect next?

Chinese Equity Market Shanghai Composite is in limelight from last few months now. We can see that volatility in Global Equity Markets has increased due to the slowdown and growth issue in China. On 4^th January 2015 Shanghai tumbled 6.9% on back of growth issues. In fact even today there was severe selloff witnessed where market fell by more than 7% which has led to suspension of trading for today. This has been keeping Global Equity Markets on the edge. It is important to understand the overall structure of Shanghai Composite.

In order to know where Shanghai will head itself and what are the crucial levels subscribe to “The Financial Waves Monthly Update” which covers in-depth research on various asset class viz Global market, Nifty, Bank Nifty Currency, Commodity and Mutual funds. Below is the part of the research:

Figure 11: Shanghai Composite weekly chart

As shown in weekly chart, an important top for this market was placed in the year of November 2007 as post that prices showed sharp reversals on downside and flashed its red signals. However 2014 proved to be a year of revival as prices managed to move higher in an impulse fashion which helped the market to head towards the highs of 5178 levels. Looking at the current scenario, prices are showing retracement of the prior up move which started from the lows of 2100 to the highs of 5178. This has surely put a halt to the upside move but one needs to understand that correction do happen in any particular asset and post its completion we might again see the resumption of the ongoing trend.

Case in point: There was no such optimism seen when market showed decent rally from the lows of 2100 to the highs of 5170 which means more than 100% of appreciation in terms of price. Whereas the recent down move has put in too much of pessimism in the mind of people even when Chinese market has protected its lows made in August 2015. For objectively understanding the trend we use Elliott wave technique.

As per Elliott wave perspective, prices completed bigger degree wave III near the highs of 6124 and post that showed 7 years of correction in the form of (A)-(B)-(C).  Wave (C) formed Ending diagonal pattern and post its completion there was sharp reversals seen on upside. This rising segment indicates that cycle degree wave …….. completed its course in mid 2014 and next leg has taken its place in the form of wave ……

Spikes are very important as it forms important highs and lows and break of the same can result into trending move on either side. Such spike was witnessed in this index during August 2015 where prices made a crucial low of …….levels. So as long as this level is protected we can continue to expect range bound action and on upside break above ……. will give us the confirmation that medium term uptrend is resuming again.

In a nutshell, ………….

To know what is next from here in Global markets along with detailed medium term outlook on Nifty and Bank Nifty subscribe to “The Financial waves Monthly update”. Also get access to daily short term research report – “The Financial waves short term update” which covers Nifty and stock on daily basis. It is during such volatile environment objective way of research is most important. Do not miss out on this strong trending move and find out crucial support or resistance levels from Trading to Investment perspective. For subscription options visit the Pricing Page.

Nifty in final leg of down move before the reversal in trend!

Bottom Line: Nifty failed to break 7980 level and reversed on downside sharply losing 170 points. Trend is negative in final leg on downside in form of wave c.

Nifty daily chart:

Nifty 60 mins chart:

Wave analysis:

In the previous update we mentioned that, “Nifty has reached towards inflexion point. Move above 7980 is required to continue the positive trend along with sustainability above 7890 followed by 7835 levels.”

In the last trading session, Nifty had Gap down opening at 7924 level and then selling pressure continued throughout the day. Nifty broke 7890 followed by 7835 level in single trading session only which indicates that trend has reversed on downside.

The selloff was not limited to only Indian markets but has been a global phenomenon. Trading on Chinese index – Shanghai Composite was halted after it crashed by 7%. However, this index is still well above its low made in September 2015. It will be interesting to see if that level is protected while sentiments turn bearish. Next few days of action is going to be crucial.

From last 2 weeks we were citing 7980 as important level. Due to the slower nature of rally we mentioned very early that one leg on downside looks pending. Prices respected our mentioned level and reversed on downside losing 170 points. Such big fall is witnessed after 3 months. Prices have taken out last 7 days prior bar in single day only which indicates weakness over near term.

From sector perspective, carnage was witnessed across the board where Bank Nifty erased the entire gains of Friday’s session and lost more than 2.5%. Along with that Midcap and Smallcap too came under pressure and closed on the negative note with 1.35% and 1.19% respectively. Not a single sector managed to close in green territory. Such synchronized selloff indicates weakness as of now.

As shown in 60 mins chart, post breaking the upward moving black channel, prices did not look back and continued to move lower till the end of session. This down move has retraced the last segment of up move in faster time and has taken out the pivot lows of 7890 followed by 7835 level. So on upside as long as 7890 (as per polarity reversal) followed by 7940 is intact on upside any rallies will be short lived.

As per wave perspective, we have been mentioning the current up move as only wave b of (z) and now wave c of the ongoing Flat correction pattern has started on downside. If this is last stages of selling then the pressure should reduce after 3 days and 7600 – 7650 can act as short term support. In case the fall extends even beyond this range then more bearish stand would be warranted.

In a nutshell, Nifty trend has reversed on downside. One should avoid catching low as of now. 7890 followed by 7940 level will act as resistance and prices can move towards 7650 levels.

Subscribe to “The Financial Waves Short Term Update” which covers Nifty and 3 stocks and “The Financial Waves Trading Update” which covers Nifty along with intraday trading strategy. For more information visit Pricing Page