Friday, March 27, 2015

Can Nifty create a panic low? Prices near crucial zone!

Bottom Line: Nifty had a strong negative close on the expiry day creating a panic scenario but buying April Put still wouldnt have been of much help!

Nifty daily chart:

 Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that,The entire structure looks like a contracting spring which is going to explode strongly to produce a trending move very soon In short, Nifty has now arrived at crucial juncture. We have been successful in capturing the downtrend so far but now a move above 8630 will indicate positivity. Let us see if we can see panic low and a quick recovery from there…”

Nifty had a Gap down opening after weak global markets and the selling pressure intensified as soon as 8470 level was broken. The movement on downside post that was a panic selling and Nifty at one point of time lost more than 200 points. An important observation is that not all the stocks participated in the selloff. HDFC, Infosys, ICICI Bank were major contributors to the down move whereas LT, BHEL, Metals that were looking weak earlier showed some resilience. This was a very peculiar behavior where a few stocks contributed to heavy selling.

As yesterday was cycle day low we did not rule out the possibility of panic low which happened. However, if this is indeed a panic low then we should now see a fast recovery from here as 54 days cycle low should be in place.

From options front, Nifty April expiry Call option of 8350 is now quoting at more than 100 points premium to that of the Put. This is one of the biggest premium that I have seen and I still continue to believe that prices eventually should rise once the current panic gets majority on the wrong side.

The Elliott wave structure looks to have changed to some extent where we are seeing a triangular formation rather than Diametric. In advanced concepts of Neo wave this triangle is known as Extracting triangle where the size of up move reduces and that of down move increases. The current down move has now become the biggest leg in the entire pattern which can be wave (d) of this triangle and now we should see an up push from here towards 8800 levels where wave (e) will be 76.4% of wave (c). 8800 is also the level of 61.8% retracement of the entire fall from near 9100. This level is also previous x wave which tends to provide good resistance to prices. However, first thing first, as of now we have not seen a positive close above previous bar high which is crucial sign for reversal in trend.

As shown on hourly chart, yesterdays low was exactly on the intersection of the channels and also where wave c = wave a. So the low near 8325 is going to be crucial and if the same is protected today it will become a spike low which we have seen provide very good support level that remains intact atleast for few days. The description I am writing here is exactly opposite to what I wrote few weeks back when Nifty made spike high at 9119 and indicated that the same should be protected for atleast few days if not weeks! Our stand was vindicated at the highs and now let see if Nifty indeed creates a spike low and starts showing upside move from here thereby getting the majority off-guard again!

In short, Nifty low of 8325 is very important. If the same is broken today and prices closes below it then the current downtrend can extend further. However, the low is the intersection of the channel, exactly on cycle low day and at Fibonacci projection zone. So, todays action is going to be crucial. A down move below 8325 will continue the current down leg whereas hourly close above 8410 will result into retest of 8470 on upside, post which some basing formation can be seen!

For research reports subscription on Nifty and stocks using Elliott wave, Time Cycles and various technical indicators visit www.wavesstrategy.com. Receive these daily research reports on email or access it directly from website. Contact us at helpdesk@wavesstrategy.com or on +91 22 28831358 / +91 9920422202 for more information. 


Thursday, March 19, 2015

Nifty path ahead: Time cycles & Neo wave

Bottom Line: Nifty continued to move in trendless fashion with no clear direction. Positive move expected today after strong up close on DJIA!

Nifty daily chart:

Nifty 60 mins chart: 
 
 
Wave Analysis:

In previous update we mentioned that In short, one should trade cautiously during non trending market environment and the current scenario looks more prone to selling on rallies and buying on dips rather than selling on break of support levels.

Nifty traded in red territory for most part of the day within a range of 8747 and 8664 levels. Prices failed to show a close above the hourly Bollinger Bands which we cited as important for resumption of uptrend. Also so far the level of 8750 is also protected which is the short term trendline resistance. A strong Gap up opening above this level which is sustained for an hour will indicate positivity.

54 days Time cycle: This time cycle is different than the 49 days topping time cycle that we use to identify important tops whereas 54 days cycle shown on daily chart is a bottoming cycle. This cycle is in close approximation to Hurst Nominal cycle of 56 days and we can see important lows near this cycle. This cycle is in its 48 days and a low should be formed within 4 to 6 days, which means that we can see an up push up for 2 to 3 days but then a down move near cycle low before the uptrend resumes as shown on daily chart.

Identifying pattern using cycles:We combine cycles in a different way to help us identify Neo wave patterns. As per cycle theory we should start wave g of diametric pattern after f is complete which will last for around 4 days. This wave g can also be in sideways correction which is currently ongoing and prices will not cross 8850. From basic Elliott wave perspective we are currently in second standard correction which looks complete and now another x wave can form on upside.

On one bigger degree, as shown on daily chart, prices have shown contracting behavior and is now moving in expanding pattern. This is again a 7 legged Diametric pattern with currently f leg under formation. Post completion of f leg a final g leg on upside should come that will retrace nearly 80% of the recent fall from 9119. Again, Diametric is 7 legged pattern with each legs corrective in nature. This pattern is therefore difficult to trade as there is lack of momentum even after breakdown of crucial supports or resistance.

In short, we can expect Nifty to move as per the path shown on the daily chart by combination of Time cycles and Advanced Elliott Neo wave patterns. It will be crucial to observe if a Gap up opening is sustained by closing. We are now monitoring the short term structure very closely in case there is any deviation from the path!

For research reports subscription on Nifty and stocks using Elliott wave, Time Cycles and various technical indicators visit www.wavesstrategy.com. Receive these daily research reports on email or access it directly from website. Contact us at helpdesk@wavesstrategy.com or on +91 22 28831358 / +91 9920422202 for more information. 

Friday, March 13, 2015

Nifty & NSE Midcap: Understanding DIAMETRIC Elliott wave pattern! The most frequent pattern but least known!!!

Advanced Elliott wave - Neo wave has more number of patterns than the basic Elliott wave suggests. 
It has become extremely important to look at these advanced patterns and as per my experience these patterns have been appearing more than often compared to the basic Impulse, Flat, Zigzag patternsDiametric is one of the new patterns discovered later that has seven legs and each of the legs are corrective in nature. This pattern is labeled as a-b-c-d-e-f-g.
Now look below why understanding this pattern is extremely important:
NSE Midcap daily chart:

This is a classic Diametric pattern text book example that can be seen on NSE Midcap index. This clearly shows why the entire rise has been on lack of momentum and there is a strong negative divergence on RSI. This is exactly the reason why we have stayed objective when everyone was turning bullish exactly at the wrong time.
A strong confirmation from high beta sector – NSE Midcap index clearly is providing a secondary confirmation for main index NIFTY.
Each of the above legs are corrective in nature and it is forming a perfect Diamond shaped Diametric pattern. To know post pattern implication and the break down areas subscribe to “The Financial Waves short term update”.
Learn these important concepts and see yourself the various new patterns that are crucial if you want to apply Technical analysis objectively. Only 1 day left for training on NEO Wave along with Timecycle concepts that too with application of various techniques on more than 100 practical charts. Get annual subscription free along with the training for the research reports. There cannot be a better INVESTMENT than this. For more information contact us NOW at +91 22 28831358 / +91 9920422202 or write to us at helpdesk@wavesstrategy.com

Thursday, March 12, 2015

Nifty:Using Bollinger Bands® along with Elliott wave for breakout confirmation!

Bollinger Bands® play very vital role in determining a trend reversal. This technique when combined along with Elliott waves provide a strong powerful entry and exit strategy. At times in order to catch a reversal even before we get two stage confirmation as per Advanced Elliott wave is to use Bollinger Bands method. An hourly close below the lower channel will provide first negative confirmation.
Many traders or Elliotticians have problems in identifying the entry levels. The reason being they depend only on Elliott wave for their trade setups but it is extremely important to use other objective techniques like channel, Bollinger Bands to get confirmation on short term time frame.
Now read the below article that helped us with entry level.
Nifty 60 mins chart: (published on 9th morning in paid Equity research report)
Happened:
Wave Analysis:
(Below was published on 9th March morning research report The Financial Waves short term update)
In previous update we mentioned that In short, the trend for Nifty has reversed over short term and the high at 9119 should remain protected atleast for few days if not weeksfaster move below 8885 followed by 8750 will be strongly bearish but if that remains protected then we can expect pullback on upside
Two stage confirmation technique as per Neo wave
Nifty had a range bound movement yesterday between 8957 and 8850 levels. Prices broke below 8885 in faster time thereby resulting into faster retracement of the last rising segment. This confirms that wave iii is complete and now wave iv is ongoing. For a strong negative confirmation that the entire up move from 8470 is complete we need a faster retracement below 8670 levels from where wave iii started. This will provide 2nd stage negative confirmation that an important top is in place. However, if one has to wait for 8670 level to initiate short positions than the indicators might enter into oversold state. So there is a tradeoff between getting a confirmation and entering a position. To overcome this drawback we have to look at short term important supports that can provide us with earlier confirmation. The same supports are now near 8850 and 8750 levels.
The support as per hourly Bollinger Bands is near 8850 from where prices bounced back on Friday. So if we see an hourly close below this level the support of Bollinger bands will be broken.
In short, the trend for Nifty will continue to be negative on break below Friday’s low at 8850 which is also weekly bar low.
Happened: Nifty broke below 8850 and touched the lows of 8677 in just 2 days times. This clearly shows that how we combine the important techniques like Bollinger Bands along with Advanced Elliott –Neo Wave together to get early entry trade setups.
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Tuesday, March 10, 2015

Nifty: Reason we have been bearish after reversal from 9119 post RBI action!

Sharp down move in Indian equity markets might be surprise to many but we have been expecting a down leg as soon as the Gap was filled on the same day of announcement. 
Below is the research report we published on 5th March 2015 morning before equity markets opened.
Nifty 60 mins chart: (published on 5th March morning in our research report)
Happened: as of 10th March 2015
Wave Analysis: (published on 5th March morning research)
In previous update we mentioned that In short, Nifty looks to be in matured stage of up move but unless prices break below previous support level of 8885 followed by 8750 trend will be positive. On upside the channel resistance is near 9060. Trade cautiously as we do not rule out the possibility of sharp reversalBANG ON!
Nifty had a Gap up opening touching intraday high near 9119 after repo rate cut of 25 bps yet another surprise move by RBI. The index opened sharply higher and many would have assumed similar price action like before which happened on 15th January 2015 when RBI took similar step. There was one major difference during both the scenarios. The previous action by RBI was when the downtrend was in matured stage and yesterday’s action was when the trend was in matured up move. We also warned that sharp reversal is possible and yesterday’s movement vindicated our cautious stand despite the event.
In short, the trend for Nifty has reversed over short term and the high at 9119 should remain protected atleast for few days if not weeks.One day of action is too soon to conclude medium term reversal and so today’s movement will be important to observe. The AD line has continued to deteriorate which is in sync with our Ending diagonal outlook. Now a faster move below 8885 followed by 8750 will be strongly bearish but if that remains protected then we can expect pullback on upside in form of final wave v which will be mostly truncated and not break the high made yesterday! It is time to sit tight as we are entering into very important zone where medium term top looks to be in close vicinity!
Happened: Nifty continued to move lower and in just 3 days time touched the lows of 8680. The fall has been steep and fast with across the board participation on downside. We have been loud all the while to avoid buying the euphoria. Such down move clearly suggests why it is necessary to have strong objective techniques that help to catch important reversal areas!
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