Wednesday, January 21, 2015

Nifty 49 daysTime cycles along with Elliott wave counts! Prices approaching crucial zone yet AGAIN!

The rise in Indian markets have been euphoric so far but, we are not buying into the theory of unprecedented gain and figures above 9500 ++ levels. The below article gives a brief overview on why it is time to stay alert and not complacent like majority. It eventually pays to not get carried away with the crowd but the emotional pressure can be enormous of not missing out the rally. However, markets are here to stay and so do wrong perceptions during major turning points. But it takes an objective technique with proven and time tested methods, belief, to stay alone when everyone is on another side.
We do not want to come in way of this euphoric rise but the Case in point is it is time to leverage less, book profits rather than start fresh investments when things look over-stretched. Various indicators have again started to align together which do not happen quite often.
Read the below research is picked up from daily report “The Financial Waves short term update”
Bottom Line: Nifty approaching close to 49 days Time cycle along with important channel line. Nevertheless, short term trend is positive with support of 8570!
Nifty daily chart:
Wave Analysis:
In previous update we mentioned that, In short, move above 8570 will continue the upside trend. On downside 8450 is the immediate support. 5 days Exponential Moving average is also placed near 8450 level which acts as a proxy for short term trend!
Nifty had another Gap up opening of nearly 25 points and sustained in green zone throughout the day. The buying pressure intensified post 1 pm and the index managed to touch life time highs near 8708 levels. This time the major gainers apart from banking stocks were Metal stocks like SSLTTatasteel,Hindalco along with Reliance Industries. These stocks have so far not participated in the up move and are finally showing some positive attempt. It will be crucial to observe if the underperforming sector can now contribute to upside index movement further from here. For now follow the trailing stop method and bar technique with stop of ……. Which is also the level above which there was channel breakout and pick up in momentum. So now this level is crucial and should act as good support.
49 days Time cycle: We have been applying this Time cycle for many months now and it has worked very well in indicating if the trend is near reversal or is in matured stage of up move. We can see that over past two times the top was formed not exactly on the cycle day but the momentum reduced after that and prices started showing distribution pattern. The cycle is again due on …. January and it will be crucial to observe if we see a top formation or few days of distribution with loss of momentum post …January.
Triangle pattern: Prices have continued to rally and touched new highs as required by running Triangle possibility. The problem with this pattern is in forecasting the last leg as it does not necessarily follow the Fibonacci relationships. Nevertheless, the projection zone which should act as strong resistance is near ……levels which also coincide with strong channel resistance shown by black trendline.
Unlike others, we will avoid getting extremely bullish for projections above 9500levels given the fact that we are approaching close to the channel resistance that has acted very well post Election results, 49 days Time cycle in near vicinity that resulted in sharp reversals in past andatleast loss of momentum over past two times, RSI has still not touched above 80 to void the daily negative divergences valid so far.
In short, continue to use reactive method with trend following system i.e. to stay positive unless we see close below ………..Also stay alert and not complacent like majority because many things are going to align together over next few days in similar way we previously highlighted in November 2014 post which there was a fall from 8627 to 7960 levels!
It is time to keep monitoring the price action on daily basis along with short term charts to understand the reversal areas and if the supports are protected or not. Subscribe NOW to the daily research reportThe Financial Waves short term updateand get insights into the objective way of looking at markets rather than guessing with majority of crowd for 9500 ++ levels! For subscription options visit Pricing Page or contact us at helpdesk@wavesstrategy.com/ +91 22 28831358, +91 9920422202.

Monday, January 19, 2015

Nifty short term trend is positive but momentum will be the key!!!

Bottom Line: Nifty consolidated after the sharp rise of Thursday post the rate cut announcement. Move above 8530 8550 is important for short term uptrend to continue.

The below research is published today morning in "The Financial Waves short term update". For subscription options visit www.wavesstrategy.com 

Nifty daily chart:


Nifty 60 mins chart:
Wave Analysis:

In previous update we mentioned that In short, move above 8530-8550 will continue upside trend towards 8630 levels where earlier high is placed. One should use strict risk management level of 8380 just in case if the rise turns out to be simply euphoric.

Nifty closed the euphoric week with a net gain of nearly 230 points on weekly basis. The entire strong gain came on a single day i.e. 15th January after the surprise rate cut announced by Mr. Rajan who has been known for surprises since September 2013 and this time it was no different. A strong Gap up move of nearly 140 points can result it catastrophe for short positions in futures. When trading in markets one should always keep leeway for events and should follow prudent money management strategies.

Now coming back to Nifty, the move on upside has kept the bias positive over short term. As long as the Gap created between 8300 and 8380 (low of Thursday) is unfilled the near term trend can continue on upside. However, decisive break of 8530 8550 is very crucial for positivity since this is the highs connected by previous two pivot highs shown on hourly scale.

As shown on daily chart, prices have managed to close above both 5 days and 20 days Exponential Moving average and the short term moving average (red) has moved above the 20 days EMA. This simple Moving average crossover system has worked very well even though it is delayed but gives good perspective on short term trend. So for reversal confirmation we have to see a decisive move below 8300 which will probably break both of these averages and will also fill the Big Gap created.

Warning signal: Even though the bar techniques are bullish one important parameter has reached near alarming levels - PCR ratio. This ratio has now reached towards 1.40 level. It has been many months since I have seen PCR ratio this high so many days prior to expiry. This does not indicate an immediate downside reversal but is associated with the risk element and suggests one to stay alert and leverage less on upside as sharp reversals cannot be ruled out.

From wave perspective, prices are currently moving in wave e of the expanding triangle pattern and close above 8530 8550 will open up possibilities towards new highs in this leg. As mentioned above use of risk management level near 8300 is very crucial in case of sudden reversal on downside.
In short, move above 8350 will continue near term positivity on Nifty over short term with 8380 8300 as important support area.

For subscription to daily research report "The Financial Waves short term update" that has Nifty along with 3 different stocks visit www.wavesstrategy.com or contact us at helpdesk@wavesstrategy.com / +91 22 28831358 / +91 9920422202





Tuesday, January 13, 2015

Nifty scenario analysis and path ahead!

Scenario analysis of Nifty applying Elliott wave theory!! 
6th January 2015 was the day when Nifty lost more than 250 points in single day. Post making a low at 8065 levels prices have been moving higher and has touched the level of 8355 in today’s trading session. However will this rally make a new high? On the other side Crude continued to move lower and now trading below $50. Are we heading towards Energy crisis? So what will be market direction?
Elliott wave theory is one of the forecasting tools we have been applying to know the strength of trend and probable direction ahead. There are times where predictability reduces due to complex corrections. However as and when prices move further it provides important information for the upcoming trend. Below are the 2 charts of Nifty (60 mins time frame) where we have analyzed the 2 scenarios. This scenario analysis is taken from “The Financial Waves Short Term Update” which covers Nifty and 3 stocks where short term opportunity exists. 
Nifty 60 mins chart:
Nifty alernate scenario 2:
Nifty scenario analysis:
As per scenario shown on first 60 mins chart, the low formed at 7960 on 17th December 2014 completed minor wave (a) and post that minor wave (b) is ongoing. This wave (b) internally marked as (red) a-b-c is forming a regular Flat correction where wave b(red) of (b) retraced 76.4% level (exact) of wave a (red) and now wave c (red) of (b) is ongoing on upside. As per this count there is probability that ……………………….
As per scenario 2 shown on second 60 mins chart, prices are moving in contracting range. This is also one of the probable scenarios as even after the violent moves and one of the biggest fall of 250 points not seen in past 6 years prices have managed to protect the preceding pivot lows. This is a typical characteristic of triangle where prices move violently on one side but only to reverse back equally fast thereby resulting into no net progress but high volatility over short term. For this count to be valid the high of …………….
Advanced Elliott wave concepts suggest that during times of complex correction the probability to forecast the pattern reduces and as & when the pattern is near completion the predictability increases drastically. It is therefore important to wait for clear breakout …Meanwhile from trading perspective, one can continue to use daily bar technique. As per this method unless we see a close below ………………….
To know the detailed research on Nifty and 3 stocks subscribe to The Financial Waves Short Term Updateand for more information visit www.wavesstrategy.com 

Monday, January 12, 2015

Dow Jones Industrial Average: Trading Flat correction Elliott wave pattern!!

US Equity market continued to move in high volatile environment. In this kind of situation one can get carried away at the highs or can create panic exactly at the lows. Hence application of objective tools is important to trade the markets. We have been applying Elliott wave theory along with basic technical analysis to capture the markets. Recently we were able to capture the down move from 18100 to 17265 levels. “The Global Waves Short Term Update” by Waves Strategy Advisors cover Dow Jones Industrial Average, EURUSD, Comex Gold and Comex Silver with applied Elliott wave counts and important turning points.

DJIA 60 mins chart: (Anticipated in the evening of 2nd January, 2014)

DJIA 60 mins chart:
Wave Analysis:

For Dow Jones Industrial Average, in the last 2 trading session prices showed weakness and has been moving lower sharply. This suggests that rally started from 17050 level is complete at 18100 levels and correction on downside has started.

Basic techniques like channeling continued to work very well on Dow Jones Industrial Average. We can see that since September 2013 prices are intact in upward moving channel as shown in black color. Recently prices found resistance at the same channel and has been moving lower. So from short term perspective, as long as high of 18100 is protected on upside trend is bearish now. Prices made a new high at 18100 however RSI was unable to make new highs which suggests negative divergence and has been losing strength on upside.”

On 60 min basis, the sharp fall in the previous trading session raises higher probability that may be wave b has completed and the next leg (wave c) has started on downside but we will have to wait for the move below 17780 levels in order to get confirmation of the same. Hence as long as prices sustain below previous peak trend will be negative and any pullback towards the same should be utilized as selling opportunities.

In short, for Dow Jones Industrial Average, near term trend will be negative with the important resistance of previous high (18100) levels. Move below 17780 levels will suggest down move to continue towards 17300 levels.

Happened: US Equity Market moved in line with our expectation and moved lower from 18000 to 17262 in 4 trading sessions. Post that prices have reversed on upside so what to expect now?  Will it break 18100 on upside?

The Global Waves Short Term Update gives detailed analysis on DJIA, EURUSD, Comex Gold and Comex Silver. Visit www.wavesstrategy.com for subscription to this Global research report.

Wednesday, January 7, 2015

Video: Elliott wave on Indian Markets and Nifty Path Ahead for the week




Video on Indian Markets and Nifty Path Ahead for the week using Elliott wave analysis. For update on Indian markets on daily basis subscribe equity research report sent directly to email id. For more details visit www.wavesstrategy.com