Monday, October 12, 2015

NSE Midcap index at crucial Fibonacci resistance of 61.8%, Bank Nifty continues to underperform

The below research is picked up from the daily report "The Financial Waves short term update" consisting of Nifty and 3 stocks along with Bank Nifty and Midcap index on periodical basis. For more details visit

NSE Midcap weekly chart:

NSE Midcap daily chart:

Wave analysis:
In the current up move of Indian Equities we witnessed that participation was seen in beaten down stocks whereas many of the outperforming Midcap stocks has lost upside steam and has been trading in sideways to negative action. During this scenario it is necessary to look at NSE Midcap index to understand medium term structure.

Above we have shown in weekly chart of NSE Midcap index which has been providing vital information. Since 2009 prices have been intact in upward moving channel.  We can see that this blue channel has been working brilliantly. The top made at 14500 level in the mid of August 2015 is exactly at the zone of channel resistance. Moreover the down move witnessed from 14500 to 12130 has retraced the last leg of up move in faster time. This provides time as well as price confirmation that important top has been made in this index which will not be taken out for next few months. This is one of the reasons behind why Midcap and Smallcap stocks are not showing much strength in the current up move.

Importance of 10 and 20 weeks Exponential Moving Average: During the entire rally witnessed from mid of 2013 till August 2015, 10 weeks EMA (red color) sustained above 20 weeks EMA (blue color) and prices continued the up move. However after span of 2 years, for first time 10 weeks EMA has moved below 20 weeks EMA which suggests that the trend might be reversing to downside.

Indication from Money Flow index and MACD: Money flow index takes into consideration price as well as Volume to judge the strength of weakness of any trend. We can see that from mid of 2014 Midcap index continued to move higher with lesser momentum and Volume were decreasing constantly. When prices made a high at 14500 level, Volumes were drastically lower as compared to previous peak. This is providing the early indication that up move was with lesser participation and also suggests that best of the up move has been done in this index. Weekly MACD has been constantly failing to move above blue line and reversing on downside. This also suggests that momentum has been slowing.

As shown in daily chart, in the mid of August 2015 prices completed minor wave a at the low of 12130 and post that minor wave b is ongoing which is now close to the 61.8% retracement of the prior down move which is now placed at 13500 level. Any sharp down move below 13000 will provide the first confirmation that minor wave c on downside has started. For further confirmation prices need to break 12130 level.

In short, we do not think major up move is possible in Midcap index from current level based on Elliott wave theory, Exponential moving averages, MACD, Money flow index and Fibonacci retracements. Hence one should trade in Midcap and Smallcap stocks with strict risk management. Move below 13000 will indicate that move towards 12130 has started. Further move below 12130 will indicate medium term negativity.

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Tuesday, October 6, 2015

Nifty: Neowave Diametric Pattern with Time cycles – Advanced Elliott wave concepts for forecasting trend!

Neo wave has more number of patterns when compared to Elliott wave.

Also there are more than 15 rules in order to identify an impulse pattern. When more number of rules are applied the accuracy increases drastically but also the complexity. There are a few new patterns that are missing in orthodox Elliott wave – Diametric, Extracting Triangle, Neutral triangle, etc. These are very important pattern as majority of the indices are exhibiting this structure. Look at the Nifty chart shown below and how the pattern recognition helped us to forecasts the trend:
Nifty daily chart shown on 3rd July 2015 monthly research report

Happened: Nifty daily chart showed on 5th August 2015 monthly update
Happened: Nifty daily chart shown on 4th September 2015

The above charts clearly show that by identifying the pattern earlier on we have been able to very accurately predict the movement of Nifty over past many months. I do not say that the accuracy can be this high everytime as it is all about probability but as long as prices behave as per the pattern forecasted it is prudent to stick with it unless there is deviation from expectations.
Also note that all of these months have been very eventful right from results, China Yuan devaluation,  FED meeting, RBI meeting and much more. Irrespective of these events or news prices continue to move as per the path forecasted for more than a month before in our monthly research report “The Financial Waves Monthly update”.

Now below is a brief excerpt from the 4th September research report when majority were bearish but we refrained from taking that stand and warned our clients that upside reversal is imperative – “Market leaders are not participating: During the fall in form of wave e the major draggers were commodity stocks – Tatasteel, Hindalco, Industrial stocks – Reliance Industries, ADAG group stocks, Realty stocks like DLF, HDIL, etc. However, each of these stocks has not taken out their respective lows made on 25th August. The pressure continues to be strong on Banking index that majority expected to strongly outperform just few months back and is now the major dragger. Internal behavior of the leaders protecting the lows is indicating that the downtrend is now in matured stage over short term and there can be upside pullback. Nevertheless unless we see a close above the previous week’s high it is better to avoid catching a low.”

Indian Equity markets behaved exactly as expected in the month of September as well. We have been able to forecasts the trend for Nifty very accurately over past many months now. This simply shows the power of pattern if identified correctly.

As shown in Figure 3, after the sharp selloff in last week of August and early September, majority of the market leaders indeed protected their lows and bounced back. We are seeing pullback in start of October and this can continue for ………….. in the form of wave f of Diametric Pattern.

To know what is next from here in the form of Diametric pattern irrespective of the news or events subscribe now to “The Financial Waves Monthly update” which covers outlook on Nifty, Gold, Silver, USDINR, Global markets, much moreAlso get access to daily short term research report “The Financial Waves short term update” Subscribe by simply visiting Pricing Page or Contact US for more details.

Wednesday, September 30, 2015

Nifty short to long term forecasts using Elliott wave, Channels, Indicators and much more...

Bottom Line: At times it is important to look at the bigger picture to understand the overall direction.

The below research is picked up from "The Financial Waves short term update" by Waves Strategy Advisors published on morning of 28th September 2015 even before RBI monetary policy.

Nifty weekly chart:

Nifty weekly chart:

Nifty daily chart:

Nifty 60 mins chart:            

Wave analysis:
In the last update we mentioned that, Today being expiry volatility cannot be ruled out and one has to keep an eye on 7910 followed by 8000 on upside and 7720 level on downside. Decisive break below 7720 will resume down move towards 7600 whereas any move above 7910 followed by 8000 will indicate deeper upside pullback.

Nifty continued to move in a range with no clear trend. Prices opened in red made a low near 7800 but later managed to close positive near 7870. There was only one day of down move 22nd September and post that we are seeing positive attempts. This is keeping the overall trend sideways for now.

At times it is important to look at the bigger degree charts to understand the overall trend. The fist weekly chart of Nifty shows the contracting running triangle formation. Yes, we are not looking at the overall up move of 2013-2014 as impulsive that many of the Elliotticians might be assuming. Many of the stocks that rose in 2014 have corrected back to the levels or lower from where the rally started. Also there is no strong internal clear subdivisions in 5 waves which is a necessity rule for any impulse pattern. Wave characteristics are in more sync with the triangular activity as shown on the first chart. As per these wave counts prices are now in primary wave [E] and so medium term trend is down for next few months. It is only on completion of this primary wave that the next big BULL TREND will start. We will highlight it here as and when we get the confirmations of the start of next bigger degree uptrend post wave [E] is over.

Now looking at the second weekly chart we can see, in the month of August 2015, sharp fall from 8530 to 7540 level which is nearly 1000 points in this primary wave [E]. Prices are moving in corrective red channel and have bounces back from the lower end of the channel. The Flat correction a-b-c is complete and we are currently in wave x which is retracing this pattern on upside. The channel resistance is now near 8330 on upside. As the line of least resistance is on downside more leverage shall be done during downtrend whereas position sizing and crucial stoploss levels should be maintained for long positions. In a nutshell, we are currently in wave x that looks to be forming a complex pattern and so short term trading might be little difficult. Nevertheless, let us look at the short term charts to understand the key levels for initiating trades.

Looking at the hourly chart, a sharp down move is followed by upside retracement and during such scenarios Bollinger Bands® will provide important support and resistance. As per this support is now at 7720 and resistance is at 7990. A close above or below these levels will result into short term trending move. Looking at the overall structure and failure of prices to generate downside momentum for more than 2 days we think there can be an upside breakout.

Pattern recognition: The daily chart shows a very similar pattern that is currently in formation in the past as well. Similar pattern looking like inverse Head & Shoulder was seen during the low of 5118 in August 2013, later during January 2015, June 2015 and now in current zone. All of these patterns in the past gave positive breakout for a move of around 400 points or more on upside. Projecting an upside move from current levels give us the upside level at 8300 which is exactly at the channel resistance.

In a nutshell, the current trend for Nifty is sideways with crucial support at 7720 and resistance at 7990. A decisive close above this level will result into a sharp move towards 8300 levels on upside. Failure of prices to correct by more than 1 day has been suggesting that one upside pullback is possible before the medium term downtrend can resume. Also RBI might cut interest rates by 25 bps given the weakness in equity markets as mentioned earlier. They might surprise by tweaking other policy rates as well. However, Mr. Rajan is much more unpredictable that markets and one should not try hard to forecast what stand he will take! 

For subscription to the daily research report with detailed view on Nifty and 3 stocks along with applied Elliott wave analysis, Indicators, Channels visit . Trade using objective and scientific methods rather than based on news or events! 

Thursday, September 24, 2015

Announcing Elliott Wave and Time Cycles Online Live Training by Ashish Kyal, CMT

Trade using Elliott wave –Learn online with practical charts and application of one of the most important technical analysis method.
In this challenging market you really need to know when to enter and exit the trend. Even if you are right calling for the overall market direction but do not time it well one might end up losing on the strategy.

These techniques have helped us calling for a major market move on downside when majority expected an upside breakout!

It is during such volatile environment that there can be plenty of trading opportunities provided you have right objective tools.

One of the most common requests we get from subscribers - Is it possible to learn how to look at a charts and find opportunities for themselves?

It is very much possible if you have the right tools but experience is also an important element but it is never too late to start gaining it!         

Now distance is not a problem. Technology helps us to bridge the gap by providing necessary real life environment.

Learn from anywhere you want. 

Our online course on Elliott Wave will guide you to identify trade setups and predict the reversal areas!

About the Speaker:

Ashish Kyal, CMa frequent speaker on CNBC TV 18 and Zee Business applies basic as well as advanced Technical Analysis concepts like Elliott Wave, Fibonacci retracement, Time Cycles, etc. He has been successful in calling major market turns including the crash of 24th August 2015 on Nifty.

Whether you are an Intraday or Positional trader or investor investing in StocksCommodities or Forex, futures or options – you get a practical trading education that you can start applying on charts after the course.

Join US for the 2 days online training webinar  on Elliott wave combined together with Technical Tools like Channels, Fibonacci, Time Cycles etc  – powerful tool to analyze markets using Elliott wave patterns.

Topic: Elliott Wave and Time Cycles – A complete different way to look at market behavior and trading.

Online training Date: 8th & 9th October 2015, Time: 6 pm to 9 pm 

Registration Fee: 8000 + Tax @14%

Speaker: Ashish Kyal, CMT

After the training: Recordings of the workshop available for 1 week + FREE research report of Equity - Nifty and 3 stocks for complete week. Support after the sessions - In case of any queries you can always post your charts on our Discussion Forum.

How to Invest for this training: You can directly make payment from the Subscribe Page here and mention product as “Online training” with Period: 1 and Amount: 9120 /- (including taxes) and we will send you all the relevant details for the training. In case of any queries for registration write to us at or Contact US here.

Tuesday, September 22, 2015

Will RBI cut interest rates? Equity markets leading government actions - US FED did not change rates!

US FED meeting was one of the major events that majority have been tracking.
The reason was obvious that an increase in interest rates by FED would have resulted into negative repercussions across global equity markets. However, we beg to differ on this and believe that the government or central bank actions are lagging indicators to equity markets. After the event on 17th September 2015, US major index – DJIA entered into red territory on the same very day even when FED did not hike interest rates!

Now below is the excerpt from our daily research report “The Financial Waves short term update”published on 16th September morning.

Nifty had a subdued opening and prices traded in red throughout the day. There was no momentum even on the downside and majority of the stocks are also stuck in a range. It seems most of the Global markets and not only India are waiting for some trigger probably US Fed meeting which is due this week. We are not waiting to see what FED announces but the reaction of global equity markets to the FED decision is going to be important. Looking at the sharp selloff in last week of August even in DJIA – US there is high likelihood that the status quo will be maintained and there is not going to be any rate hike. An uptick on this news will be in sync whereas a sharp selloff will result into news that the economy is still not out of the woods and so FED did not hike the rates. Case in point: News will change based on the market reaction post the event! For us a negative close on a positive outcome will be bearish and vice-versa.

Will RBI cut interest rates in its policy meeting on 29th September 2015?
Looking at the performance of Indian equity markets over past few weeks and given the sharp selloff on 24thAugust until first week of September, we think there is very high likelihood for RBI to cut repo rates by atleast 25 bps! We will not be surprised to see if RBI tweaks other key rates as well to increase the supply of money in economy. As mentioned earlier Equity markets are leading government actions and central bank actions are lagging indicators.

Nifty daily chart:

The above chart shows that the cut in interest rates by RBI in Feb 2015 created a medium term top on same day at 9119 levels. Later the rate cut was done in June and markets continued to move lower even after that. So irrespective of the RBI cut in interest rates equity markets continued to drift lower.

We strongly think that the underperformance in equity markets will put pressure on RBI to cut interest rates in upcoming meeting on 29th September but we have our doubts if Nifty will move higher after the cut. Recent past shows markets reacting lower on rate cuts. Let us see if history repeats again this time!

We do not rely only on one aspect of history to base our decisions but there are lot of other indicators  Elliott wave pattern, Indicators, Moving averages which are slowly getting aligned again! We will highlight in our daily research report when is the time to pull the trigger

Do not miss out the another opportunity which is going to arise soon like the one we saw in last week of August  a strong trend. Subscribe now to The Financial Waves short term update from Pricing Page. For any other details visit