Elliott Wave India - Taking technical analysis to next level

Patterned nature of freely traded Markets makes them Predictable!

2012-02-28T16:51:00.000+05:30

We, at Waves Capital, 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 in 1930s 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 20th February 2011. The below chart shows a weekly Nifty chart with big “Election gap” when markets hit upper circuit and a 15 minutes chart on the right with a small intraday gap. This is the best Fractal example one can find in stock markets:

Elliott wave provides us the tool to identify these repeating Patterns & Fractal nature of markets and helps us exploit them to our advantage.

chart courtesy: Elliott Wave International

As per Robert Prechter, the above chart shows Elliott's idea of how the stock market is patterned. If you study this depiction, you will see that each component, or "wave," within the overall structure subdivides in a specific way by one simple rule: If the wave is heading in the same direction as the wave of one larger degree, then it subdivides into five waves. If the wave is heading in the opposite direction as the wave of one larger degree, then it subdivides into three waves (or a variation).

This Elliott wave pattern is seen across the world major stock indices.

Everything in this world is symmetrical & patterned and there is no place for randomness to exist for extended period of time. We are against the theory of Efficient Market Hypothesis that claims humans are rational animals. This is against the law of nature and humans do deviate away from rationality and choose the path of herding thereby exhibiting trends & patterns of repeatable forms / structures, making it plausible to predict the markets.

There is no chaos in this perfectly rhythmic world which is driven by the laws of nature and freely traded markets like stock markets are no exception!

Waves Capital is one of the elite market forecasting and research house in India providing in depth analysis and forecasting of global markets across varied asset classes including Equities, Commodities, Currencies, Bond Yields. Analysts at Waves Capital are qualified Chartered Market Technicians (CMT) & Chartered Financial Analysts (CFA) who employs unique techniques of Economic, Cycle and Intermarket analysis along with Elliott waves to derive at market forecasting. Waves Capital also educates and trains investors and public at large about scientific and systematic mode of investing and trading.

Contact information: Email: helpdesk@wavescapital.com, Follow us on Linkedin / Facebook / Twitter: WavesCapital

Nifty intermediate top in place?

2012-02-24T23:24:00.002+05:30

Nifty continued to drift lower as we were expecting. USDINR chart also supports our bearish view on Indian markets!

Nifty weekly chart:

Nifty Daily:

Nifty 60 mins:

Nifty continued to move in downward direction. Advanced decline continues to deteriorate with 1800 declining stocks vs 1080 advancing on BSE. There is no relief rally either in smallcap or midcap space. All this continues to confirm our stand that current down move will lasts atleast for few weeks now.

As seen from Nifty weekly chart, we have a big red candle this week for first time since 4600. Psychologically many traders might still be holding onto their long positions and assuming the current pullback as minor downside correction. Fall might gain acceleration when longs start getting unwind. Objectively, long positions shall be exited unless we move back above 5570 which will then confirm current pull back as minor correction. But unless that happens we maintain our bearish stand.

As seen on 60 mins chart, we have now drawn a new blue channel. Prices are well confined within this band. Please lower your stops now towards 5540 levels.

We mentioned in our report published on 2^nd January 2012, “An end of terminal pattern result in euphoric rise that retraces the complete previous down pattern in less than half the time and sometimes in just a fourth of the time. A move up as shown on chart will be surprise to many but not to our readers.

An up euphoria will then be created by Nifty breaking above crucial resistance levels as shown and a new up trend has started in 2012 will be the talk of the town. Nifty can move high to as much as 5600 – 5800 levels. However we would be looking out for shorting opportunity…”

And following is the statement by “IIFL” yesterday on current rally in Indian markets -

“If I had to choose one of the options, then I'll say it is the beginning of a bull market rather than a bear market rally…”

We can clearly see drastic shift in the sentiments from acute pessimism to extreme optimism. This is not a surprise to us and we had clearly mentioned this will happen on 2^nd January 2012. Also the statement has come exactly at the time when we are looking for shorting opportunities.

In short, the trend continues to be down and sentiments along with USDINR are supporting our bearish stand which might last atleast for few weeks. Any move above 5570 will however indicate one more minor up leg is pending after which the correction will start but that looks like a lower probability scenario as of now.

USDINR at crucial juncture!

2012-02-24T17:18:00.000+05:30

See yourself what do we think of Indian Rupee against US Dollar (USDINR). Prices have been moving in predictable fashion and forming very clear Elliott wave patterns.

USDINR (Feb Contract): Daily chart

Prices moved up in 5 waves and made a high near 55.06 (Feb contract). From there we corrected in the form of wave A till 49. We are now bullish on USDINR for following reasons:

1. 61.8% retracement of entire move up from 45.45 to 55.06 (Feb contract) is at 49

2. Previous 4^th wave support is at 49

3. Internal wave counts show we are in 5^th wave which is forming as ending diagonal

4. Time cycles show we are nearing a bottom very soon and shall start rallying (i.e. USDINR move up) anytime now

5. 10 period ROC is showing strong positive divergence with respect to price and has now moved towards 0 levels.

We think that USDINR shall bottom anytime now in next week and start a strong leg up which will take prices atleast towards 51 – 51.50 levels. Let us wait and watch if we are measuring this currency pair correctly with our technical tools!

For more information on Forex Financial Edge short term update, which is published alternate days that show not only USDINR but also other cross pairs GBPINR, JPYINR, EURINR, write to us on helpdesk@wavescapital.com.

Waves Capital - Nifty Happened scenarios - Path Ahead:

2012-02-22T19:18:00.001+05:30

Waves Capital (www.wavescapital.com): Below excerpts are picked up from past 3 Financial Edge short term updates and this itself proves how accurately we are measuring the pulse of Indian markets. Write to us on helpdesk@wavescapital.com if you would like to subscribe to this Daily research publication on Indian Equity market and see where we are headed from short to medium term.

Published on 3rd Jan 2012:Nifty Daily chart: PATH AHEAD

Published on 3rd Jan 2012 before 8:30 am: We have shown Nifty path ahead on 3rd January 2012 when bearish sentiments were prevailing across the crowd. We were bullish then for a target near 5600 – 5700.

Happened as on 21st Feb 2012:

Happened: Nifty went up in this one side trend from 4600 levels and made a high of 5629 earlier than March. BANG ON!!!

Published on 21st February 2012 before 8:30 am:
Nifty Weekly chart:

Published on 21st February 2012 before 8:30 am: As shown on weekly chart of Nifty we have reached near the very strong resistance trendline since November 2009. This line acted as strong support for many months and shall now act as strong resistance (Polarity reversal)... However failure over next few days will confirm the importance of this resistance zone and we will be looking for trend exhaustion as long as 5650 – 5700 remains intact on upside.

Happened: Nifty failed to cross above the mentioned levels of 5650 and reacted steeply down on 22nd February falling more than 100 points in single trading session.

Published on 22nd February 2012 before 8:30 am:
Nifty 60 mins chart:

Published on 22nd February 2012 before 8:30 am: We believe this trend from 4685 is in its matured state and as long as 5650 – 5700 is not broken on upside we will refrain from initiating fresh long positions…BANG ON!

Happened: Selloff was seen across the sectors with blue chips like SBI, DLF, Tatasteel, etc falling more than 5% and Nifty fall by almost 2% in single day closing at 5505 from high of 5629.

Subscribe to our “Short term Financial Edge Research” to see where we are headed from here and trade objectively with strict stop loss and target levels. We have been able to capture entire move up from 4685 levels and have been out when most of the people started turning bullish. Write to us on helpdesk@wavescapital.com to subscribe NOW!

Waves Capital (www.wavescapital.com) - Applied Elliott wave - Ending Diagonal pattern: ABB

2012-02-16T15:09:00.001+05:30

Waves Capital (http://www.wavescapital.com/): Elliott wave Ending Diagonals are wedge shaped patterns that offer very good trading opportunity. The below is an excerpt from Financial Edge short term update published daily before 8.30 am that shows Nifty along with 3 other stocks exhibiting such appealing opportunities. Subscribe now by writing to us on helpdesk@wavescapital.com and get the best of the trading opportunity alerts in this fast moving market.

ABB Daily chart:

Anticipated on 5th Jan 2012

ABB Happened:

On 5th January we mentioned “ABB on the daily chart has formed an ending diagonal pattern. The prices have given a break on the upside & sustaining above the downtrend line. At the bottom the RSI is showing a strong positive divergence. In our view wave ‘E’ has completed near the 540 levels. In the near term we can expect an upmove to 670 -700 levels. The stock has immediate support near 565 levels. As long as 540 levels is protected on the downside we would maintain a positive stance for further upside from current levels.”

As anticipated in our previous update prices have completed the wave ‘E’ & we could see an up move that far exceeded even 700 levels. In the above chart we can see the stock has made a vertical rise after breaking the ending diagonal pattern & has retraced the entire fall of the diagonal pattern to 900 levels. The stock has given a 50% return in quick time.

Write to us on helpdesk@wavescapital.com to see what lies ahead for ABB and Indian markets.

Nifty spectacular rally - A surprise for many!

2012-02-16T01:17:00.001+05:30

Nifty Daily chart:

Nifty 60 mins:

India is not the only market that has rallied hard yesterday. Asian markets like Hang Seng (HongKong), Taiwan, Nikkei (Japan) registered more than 1.5% gains. The rally in India is not in isolation but in sync with other Asian indices and we are not seeing any exhaustion yet in Asian markets.

Yesterday’s rally has been strong and we reached the target zone of 5500 – 5550 in single day. Also the gap up opening indicated that 5425 was indeed a crucial resistance level. We have said before crucial support and resistance levels are usually taken out with gaps and that is what we saw yesterday. However from trading perspective this kind of openings ensures that traders do not make money. A gap up of almost 50 points and then continuation of rally indicates there is strength left in this rally. We will not come in way of such a strong rally. However our target of 5700 mentioned on 3rd January report looks now achievable within February itself instead of March.

From wave structure perspective, it seems that wave v is extending and we are in minute wave (iii) of wave v.

Midcap index and stocks continued its spectacular performance. As long as the gap between 5425 and 5475 remains unfilled the trend is up with next strong resistance near 5700 now!

Applied Elliott wave theory - Tatasteel

2012-02-13T16:46:00.000+05:30

Tatasteel Daily chart:

Applied Elliott wave theory - Tatasteel

The above chart of Tatasteel shows Applied Elliott wave theory at its best. 5 waves move up was a rare event in 2011 since the entire Indian market was moving in a complex correction. Beginning of 2012 got us with impulsive up moves in few stocks. Tatasteel is one of those stocks and it exhibits what an ideal impulse wave should look like. Not only this stock has followed the 3 important rules but also most of the guidelines as well.

Rules of Elliott wave:

a. Wave 2 cannot retrace complete of wave 1

b. Wave 3 cannot be the shortest of waves 1 and 5

c. Wave 4 cannot enter into territory of wave 1

All of these rules have been followed.

Guidelines of Elliott wave:

a. Wave 3 is usually the longest and can be 1.618 / 2.618 times of wave 1 or larger if extended

b. Wave 4 will usually form a triangle

c. Wave 3 if extended, wave 1 and wave 5 will trend towards equality

d. Wave 5 and wave 3 will usually show negative divergence which indicates loss of momentum and break of 2-4 trendline will confirm impulse 5 waves up is over and 3 waves downside correction has started.

Each of the above rules and guidelines is well observed in 60 minutes chart of Tatasteel. This is the power of Wave theory where one can predict the future action and what path prices will follow.

We have been predicting this movement as and when it was developing. This is indeed a thrilling experience.

Subscribe now to our Daily research publication and see yourself what does Indian major index – Nifty is showing along with 3 stocks selected on opportunity basis. Also learn the power of Elliott wave and see how it works on realtime basis. Write to us on helpdesk@wavescapital.com for more information.

Nifty at crucial channel support!

2012-02-13T00:47:00.002+05:30

Nifty Daily chart:

Nifty 60 mins chart:

We have been very accurate in cautioning our readers about the current uptrend. We mentioned in our previous report that we are in matured state of trend and prices might rally a bit and then start correcting. We had a big down move on Friday as soon as 5370 was broken and Nifty closed on that level (5380 after average). Also as seen from 60 mins chart, prices closed on the red channel which is acting as a very crucial support line for the entire up trend since 4685.

Prices re-entered the triangle after breakout thereby warning that the downward correction has started. Next 2 days are very crucial which will tell us if we are correcting in the form of sideways action or a zigzag formation (steeper) correction. Break of 5325 will increase the selling pressure and we can then correct to as much as 5050. We also have a strong negative divergence with respect to RSI.

Time wise February is going to be difficult from trading after good trending move in January. Also corrections usually take more time than impulsive moves and so please keep lower exposures in either direction as corrections can get very complex.

In short, our bias is now negative as long as 5425 is not broken on the upside. A break below 5325 will increase selling pressure else we can move in sideways correction this week.

The Biggest rally since 2011 (Price+Time) continues!

2012-02-07T00:44:00.001+05:30

Nifty Daily chart:

Nifty 60 mins chart:

As show on the Daily chart, 5350 is the level below which there was big Gap down opening and Gap up actions during past months failed to take prices above this level. We therefore continue to believe 5350 – 5400 as crucial resistance level and break above this will open further upside targets.

Over medium term we continue to believe that 5700 is the ultimate resistance area and it will be very crucial to see price movements if and when we reach there. For now as seen on 60 mins chart, the red channel is intact and as long as 5250 – 5260 level is not broken on downside we will continue to be positive on Indian markets as a whole.

Midcap index continued to show strength and there is no deterioration in the Advance – Decline ratio even now. We would refrain ourselves from going against such a strong trend and giving levels where current rally shall end but would rather approach the scenario in anticipatory model and we will know as and when prices reverses by breaking important supports and channel lines. Till then enjoy the uptrend as long as it continues.

For long positions, please trail stops near 5260 levels for now.

Sensex Time Cycles and Symmetry

2012-01-31T18:28:00.000+05:30

Sensex Anticipated on 1st November 2011:

Sensex Happened:

Bottom Line: Sensex cannot move more systematically in sync with Time cycles than it is doing currently.

Sensex: Time Cycles

We mentioned previously on 14^th October, “Everything is so systematic that it cannot be controlled or manipulated but humans by default exhibits this natural phenomenon and makes prices move within channel, following 15 days rally, that retraces 76.4% of fall, with each down leg having 3 waves, and each 3^rd wave forming positive divergences!!!

If the same systematic approach continues the current rally is only in its 6^th day with approximately 9 more days to go and current up leg should also retrace 76.4% of previous down leg taking it near 18000 to 18300 levels which is also the upper end of the channel, 23.6% level of retracement level of entire rally since bottom of October 2008 (now act as resistance) and resistance line coming in from November 2009 lows (shown on 1^st chart). All these precisely converge together at 18000 – 18300 levels and this should be touched on 26^th October ( +/- 3 days).” Simply PERFECT!!!

This is what we mentioned again on 1^st November, “On 26^th October, Indian equity markets were open for only 1.15 hour on account of Muharat trading and 27^th October was holiday. So ideally 28^th October becomes likely date for 18000 levels and index opened with a huge gap of almost 400 points that day making a high of 17908. This is in perfect sync with the symmetry we have observed.

It is now imperative to observe how Sensex reacts from current levels. A sideways consolidation forming a rounding type pattern has been seen during previous tops near the downward sloping trendline and so we can expect a similar sideways consolidation near 17900 – 18300 levels before the down leg starts!” BANG ON!!!

Sensex formed a top near 17900 levels in 16 days and reversed from there. Prices started moving down and formed a low near 15400 levels within next few weeks as predicted. As highlighted on first chart (circled area) on November 1^st clearly stated that an intermediate bottom should be in place during second week of January and BANG ON Sensex formed truncated low on 9^th January 2012 at 15650. Since then we started rallying and now are close to 76.4% retracement level of previous down move. Also we are near the channel resistance which gets intersected at 17400 - 17500 levels.

If previous structure has to continue we can form a rounding pattern in form of sideways action over next few days. We can also see each rally has taken on an average 16 days and current rally is in its 16^th working day today from the truncated bottom on 9^th January 2012.

To conclude, up time cycle i.e. average 16 days of rally, channel resistance and 76.4% retracement all are in range of 200 points of Sensex and so it would be crucial to observe if we breakout from here. Close above 17500 will raise the odds that the rally is continuing but as long as that is not taken out we are assuming the previous similar pattern and structure is intact and we can move sideways or down from here. A move below 16800 will confirm previous pattern is intact and downtrend has resumed.

From trading perspective it is better to stay out in current week and let market prove itself which path it wants to follow, positive above 17500 or bearish below 16800!

Interim Update - Waves Capital

2012-01-30T12:18:00.003+05:30

Bottom Line: Sensex and Nifty has reversed from crucial resistance level of downward sloping trendline of entire 2011. Important resistance lines are usually taken out with Gaps and failure of prices to rally above this might indicate weakness in current week.

For the first time in this entire move up from 4700 to 5200 we are seeing a big Gap down opening and if Nifty fails to cover the gap today or by tomorrow it will indicate correction of entire uptrend has started. Please cover your long positions at current level and reinitiate only above 5225. Break of 5100 will confirm short term downtrend and shorts can be built below 5100.

Waves Capital: Published at 11:45 pm to subscribers
http://www.wavescapital.com/, Email: helpdesk@wavescapital.com

Nifty at crucial juncture!

2012-01-30T12:13:00.002+05:30

Nifty Daily

Nifty 60 mins

Nifty continued to show very good weekly performance and poor results by heavy weights like Reliance did not hamper the uptrend.

Nifty now lies at very crucial juncture of 5200 levels. This is the level where the trendline from November 2010 (since down trend started) intersects prices. As seen on daily chart, a close above 5250 level will give confirmation that this channel is broken. However on Sensex 17400 – 17500 will provide that confirmation and we have seen it in past when Nifty gave false breakouts above the trendline but Sensex did not. First half of next week will provide additional vital information about future path of this up trend. If prices struggle to break above this trendline and closes below 5100 we will know the best part of uptrend is probably over and we can be in wave iv of this impulse or a correction of this entire move up has started.

RSI has also entered into new territory which was not seen during the entire move down in 2011 and so this trend up is different than the previous corrective up moves. The momentum is stronger than prior moves.

As seen on 60 mins chart, RSI has been moving in very bullish pattern taking support near 50 – 60 levels. This type of movement is seen usually during impulsive moves and so we are sticking with impulsive wave counts for this uptrend. Also the bias continues to be positive and there is not sign of exhaustion as of now.

In short, we remain positive but will just remain cautious as we are running into series of resistance levels. A close above 5250 will indicate further positivity atleast till 5325. Any move below 5100 will indicate short term pull back or correction of entire uptrend has started.

Please trail your stop now towards 5095 levels.

Nifty Step-up move continues: Next few day's trading action to give important clues for Wave Structure...

2012-01-21T16:10:00.002+05:30

Nifty Daily Chart:

Nifty Daily chart: A step up rally continues…

Nifty 60 mins chart:

Nifty had a very good week and closed on Friday near the week’s high. Prices rallied from the low of 4827 and made a high of 5065 on Friday. Real Estate, Banking and Metal sectors had very good rally and smallcap, midcap stocks showed very good impulsive moves not seen in past entire year of 2011.

As seen on daily chart, prices continue to give respect to the upper trendline of the blue channel from where it took support on Friday and rallied steeply during final hour of trading. Reliance results as per newswire were below expectations but we would refrain from commenting how this will impact stock prices today as we have seen TCS, even after declaring results in line with expectations reacted negatively.

Nifty second daily chart shows a very bullish outlook, given the step up move shown. We can see that since the bottom at 4600 prices has moved up 1 day then corrected for 5 days, after that prices moved up by 1 day corrected by 4 days, then 1 day up corrected by 1 day and 1 day up again yesterday. Time wise corrections are getting smaller and the rally looks to be getting steeper. We have shown that there is increase in the degree of rally when measured against the horizontal axis. This is very bullish to us and usually happens during 3rd waves. Such scenarios do not happen that often and are rare species seen on charts during corrections. However the caution sign is magnitude of each up day. We are not seeing each up day bigger than the previous up day and so we will keep the options open as this up move as corrective and not impulsive. Either ways the rally should continue up and from trading perspective do not make much difference.

Nifty 60 mins chart shows that 4945 which was previous resistance should now act as support and please trail your stops to this level. As long as this level is intact we remain firmly bullish and prices can reach 5100 and plausibly higher. Today’s and tomorrow’s action will now reveal if we are indeed in 3rd wave as any smaller rally from here will raise the red flag.

Readers of our report, who are long since 4685, please trail your stop now towards 4950 levels!

Nifty continues to move as expected!

2012-01-16T09:12:00.000+05:30

Nifty Daily

Nifty 60 mins

As shown on Daily and 60 mins chart, Nifty continues to move in a well defined up channel. Prices are moving in consolidation since 2 days as expected.

On Friday, S&P downgraded France along with Italy, Portugal, Spain & Austria. It is being said that markets were already expecting this and Germany rating is kept unchanged which was very important. It will be now important to observe how world markets react on Monday given series of downgrades. A sideways to small negative action will suggest resilience to news event and internal strength globally. However, we still believe this news event will have temporary impact, if any, and the bigger trend will resume its direction which is up for now atleast in India.

As seen on 60 mins chart, we have either completed wave ii or b at the low of Friday at 4840 or which can complete near 4820 level. After wave ii / b is complete we shall start wave iii or c. The structure of wave up will make it clear if we are indeed in for impulse up or a corrective rally. Either ways, atleast one up leg looks pending and we should head towards 4940 – 4950 levels.

Midcap & Smallcap stocks continue to show very good strength. Stocks like Suzlon, IDBI, JSW Steel and largecaps like Hindalco, Tatatsteel, Tatamotors etc are showing amazing strength and have been moving the way we expected during beginning of January. Hindalco has infact broken above the 1 year downtrend channel which is very strong signal for metal sector as a whole. We had shown Hindalco blue print few weeks back and this is exactly in sync with our expectations which might be a surprise for many other analysts and traders.

For now, crucial support levels lie at 4800 followed by 4765 and as long as these levels remain intact we can head towards 4940 and plausibly higher. Increase in speed of rally is what is important if it is a 3rd wave else we will label this up move as well corrective!

Infosys Elliott wave analysis and Results.....

2012-01-14T13:24:00.000+05:30

Infosys result weighs on the Indian markets but Bloomberg suggests profits beat analysts’ estimates!

Below is the chart of Infosys after the results were announced. Write to us on helpdesk@wavescapital.com to get complete elliott wave analysis and what we expect from IT industry as a whole. Few wave labels and path ahead for Infy have been purposely deleted from the below chart:

Infosys Daily chart

Infosys declared better than estimated profits as per Bloomberg but still this stock was down more than 8% in single day just based on future guidance. This is a very big fall for IT bellwether but is no surprise to us. For IT, we mentioned before on 27th December 2011 that “It is quite sometime since we covered IT bellwether TCS and Infosys. The above chart (shown on 27th December) is a Daily representation of TCS prices and it clearly indicates why we are refraining in providing any views on this stock. Prices have been moving up in overlapping formation with random movements within the channel. We also mentioned entire rally as corrective and so looking for selling opportunities”

This clearly put forwards the point what happens when wave structure suggests weakness but prices move up in overlapping formation. We believe that events do not drive stock market and can lead to only short term movements or spikes but it is the basic social mood and perception of the crowd that moves the stocks. Infosys movement after results clearly conforms to this belief.

To see what is path ahead for Infosys subscribe to our daily research publication of Indian equity markets - Short term Financial Edge. Write to us on helpdesk@wavescapital.com for more information.

Waves Capital: New Product Launched: Nifty Trading Strategy Report

2012-01-12T19:46:00.001+05:30

Waves Capital (www.wavescapital.com):

We have launched a new product that does not show the complex technical analysis and Elliott wave analysis shown in our daily Financial Edge report. Our new report Financial Edge Trading Update will have only Nifty and is ideal for traders who would like to know trade setup for the day and are not much interested in wave structure and stocks. This new report is also published everyday morning before 8.30 am and clearly mentions the levels where trades can be initiated what can be the trading strategy for the day.

Please mail us across on helpdesk@wavescapital.com for more information or to see the sample report.

Nifty continues to pass cycle lows by moving sideways!

2012-01-10T08:48:00.000+05:30

Nifty Daily chart

Nifty 60 mins chart

Nifty is not doing anything but just buying time maybe to pass out cycle lows. During start of the year itself we mentioned 16th Jan as the cycle low date and Nifty is probably moving closer to this date before breaking out.

On daily chart, we have shown 2 standard deviation line. This indicator suggests how much prices are deviating from the moving average over a period of 14 days. This indicator is now very close to the support level from where it has bounced back many times. This does not indicate direction but does indicate a strong directional move is expected soon as prices should again start deviating from their mean levels.

60 minutes chart is showing Nifty’s sideways action at its best. Nifty has been testing patience for directional players and is moving in a trendless fashion. We continue to maintain our stand that a close above 4800 will give a strong positive breakout & we can move towards 5100 levels but a move below 4685 will indicate further weakness ahead till 4600 levels.

Waves Capital: Nifty anticipated & Happened! AGAIN!!!

2012-01-04T20:07:00.002+05:30

Waves Capital (http://www.wavescapital.com/): The below chart was published on 30th December morning 8.30 am in Financial Edge short term update (Daily research publication) that showed the possibility of triangle formation and the crucial support and resistance levels which holds true even as on date.

Nifty 60 mins chart

Nifty as on 4th December 2012

The above chart itself explains how well the levels have been respected and even the triangle pattern that we showed as a probable scenario between two converging lines has been respected even today. Please write to us on helpdesk@wavescapital.com if you would like to subscribe and be a part of this objective analysis and reduce emotional stress!

Nifty path ahead 2012:

2012-01-04T11:17:00.000+05:30

Nifty Weekly: Path Behind 2011

Nifty Path Ahead: 2012

2011 Snapshot:

Nifty weekly chart shows what we left behind in 2011. The entire move down is well channeled in 2011 and complex. The year was one of the most difficult year maybe in a decade because of overlapping complex pattern formation. There was no clear trend in either direction. 2003 – 2008 had a good up-trending phase. 2008 had good downward phase where Indian markets moved down steeply. 2009 – 2010 again showed up-trending moves with election gap (circuit up) during mid of 2009.

2011 however did not produce big trending moves but intermittent minor trends. First chart shows 20 Blue bars (Weekly closing up) and 31 Red bars (weekly closing down). This statistics is itself sufficient to convey how Nifty index has moved. But please understand the stocks and sectors behaved very differently during the same period. Sectors like Banking, Real Estate, Capital Goods, Metals performed very poorly whereas sectors like IT, Healthcare, FMCG outperformed. The market as a whole was completely divided.

2012 PATH AHEAD:

The second chart clearly shows what we are expecting in 2012. 69 days Time cycles that we have been showing since past 6 to 9 months is bottoming out around 16th Jan (+ 8 days). The prevailing sentiment is extremely bearish, which is contrarian indicator for us. A break of previous low at 4531 will turn even the remaining few bulls into bears and that is exactly where Nifty should bottom out for medium term.

Wave pattern forming is an ending diagonal (Wedge) and it satisfies the most important requirement of loosing momentum as can be seen from both weekly and daily chart where RSI is constantly forming higher bottoms. We are currently in wave e of this pattern or wave d is still ongoing. Either ways it will be sideways to lower drifting market with no strong direction over next week. An end of terminal pattern result in euphoric rise that retraces the complete previous down pattern in less than half the time and sometimes in just a fourth of the time. A move up as shown on chart will be surprise to many but not to our readers.

A new uptrend euphoria will then be created by Nifty breaking above crucial resistance levels as shown and a new bull market has started in 2012 will be the talk of the town. Nifty can move high to as much as 5600 – 5800 levels. However we would be looking out for shorting opportunity then during mid to end of March (as per 32 weeks cycle founded by Vivek Patil) that fits exactly in sync with our 69 days Nifty / Sensex cycles.

Also each of the leg of ending diagonal till wave c has taken approximately 9 days and so wave d and e combined should take around 18 days to complete this pattern. We have already completed 8 days and has 10 to 11 more working days to complete. This again gives us a date of 16th January 2012 which is exactly in sync with our 69 days cycle bottoming on 17th January 2012.

USDINR is also forming an Ending diagonal pattern on upside – a wedge like structure. Bank Nifty index is showing similar formation and losing momentum on downside. This conforms to our pattern analysis on Nifty.

On completion of top around 5700 we can start a steep fall that will be a good trending move again but on the downside.

In short, 2012 shall be a good trending year opposite of what 2011 was and hopefully a year less complex and with better tradable opportunities!

Adieu 2011 and Welcome 2012…

2011-12-31T10:20:00.000+05:30

Wishing you all a very Happy & Prosperous 2012!

Waves Capital: Nifty moved exactly as we have been anticipating, Snapshot of past 3 days!!!

2011-12-30T20:25:00.001+05:30

Waves Capital: Below excerpts are picked up from past 3 Financial Edge short term updates and this itself proves how accurately we are measuring the pulse of Indian markets. Write to us on helpdesk@wavescapital.com if you would like to subscribe to this Daily research publication on Indian Equity market.

Published on 27th December 2011 before 8:30 am

Nifty 60 mins chart

Published on 27th December 2011 before 8:30 am, “..we now stand at crucial juncture and there are other plausible scenarios opening up since Nifty is failing to move above 4800 levels”

Happened: Nifty made a high of 4800.40 and turned immediately from there and made a low of 4724 after falling steeply from 4800 levels we had mentioned.

Published on 29th December 2011 before 8:30 am

Published on 29th December 2011 before 8:30 am, “…A break of channel increases our bias towards negative side. Below 4690 we might head towards 4630 levels.”

Happened: Nifty made a high at 4700 failed to sustain there and broke 4690 then making a low of 4639

Published on 30th December 2011 before 8:30 am

Published on 30th December 2011 before 8:30 am, “In short, during last trading day of the year 2011, it is advisable to have very less exposure on either side. Bias for the day is sideways and Nifty can move between 4620 – 4690 levels.”

Happened on 30th December 2011: Nifty made a high of 4690.45 and low of 4610, finally closing the year at 4618 (average close 4624)

Write to us on helpdesk@wavescapital.com for subscribing to The Financial Edge report and see it yourself well before market opens what Nifty and stocks are going to do for the day!

Crude uptrend driven by news event but will it last!!!

2011-12-28T18:52:00.000+05:30

The below is an excerpt from Commodity Edge short term update by Waves Capital which is published on Daily basis. A few labelings are purposely deleted since it is a free section

Crude Daily

Crude Hourly

Crude rallied sharply yesterday after a senior Iranian official on Tuesday delivered a sharp threat in response to economic sanctions being readied by the United States, saying his country would retaliate against any crackdown by blocking all oil shipments through the Strait of Hormuz, a vital artery for transporting about one-fifth of the world’s oil supply. Crude immediately started going up and came very close to previous top of 5392 level.

We still continue to believe that we are in wave ? formation but the short term trend continues to be up. Wave ? in case of flats can exceed start of wave ? and can extend even further. The magnitude of the upward correction is always difficult to forecast and time wise this wave shall usually take more time to develop. This is what has happened here as well.

To read where crude is headed from here and if news is really driving crude prices higher write to us on helpdesk@wavescapital.com for subscribing to our Commodity Daily publication..

Hindalco BLUE PRINT!!!

2011-12-27T17:57:00.001+05:30

The below chart was published in Financial Edge Short term update, a Daily publication of Indian market. A few of the labelings have been purposely removed. Write to us on helpdesk@wavescapital.com if you would like to subscribe.

Hindalco Daily Chart

On the daily chart we can see an amazing scenario developing in Hindalco prices based on the study of Time cycles & Fibonacci relationship. The stock has retraced 61.8% of the entire upmove from 37 -250 levels.

Prices have corrected 55% from the highs of 250 levels in 233 days both 55 and 233 are Fibonacci numbers. Also the drop in value terms has been 140 (Fibo 144) and average per day fall is 0.60 (Golden ratio – 0.618). All this simply signifies the importance of Fibonacci series in stock markets. This also indicates the low formed at 113 is an important low and odds increases that this low shall be respected atleast for few weeks.

In our view the entire upmove from 2009 lows has rallied in an A-B-C formation. On the larger time frame we have shown the 328 days cycle and 82 period cycle. Both cycle has formed the bottom in first week of November thereby indicating that an uptrend can last till February 2012.

To get the short term and medium term price targets with crucial risk management levels write to us on helpdesk@wavescapital.com

Nifty took a "V" turn...

2011-12-21T23:51:00.000+05:30

Nifty Daily

Nifty 10 mins chart:

Nifty 10 mins chart shows that we have moved down in the form of a-b-c correction and not 5 waves impulse. As we know wave C should be 5 waves move and since current down leg from 5099 to low of 4540 cannot be counted as 5 down we think this was only wave b of higher degree wave b as shown on daily chart. We have now started wave c on upside of this b wave.

Also yesterday’s rally was steep enough and retraced the previous c leg faster thereby indicating that current uptrend can give us bigger pull back on upside than anyone is actually expecting. Also we can see a break above the downward sloping red channel as shown on the 10 mins chart. Also in this current down leg we did not see Nifty moving down by more than 120 points from previous day’s close but a rally of 150 points in single day yesterday make our positive bias over shorter term stronger.

Sentiments have been bearish across and even most commonly read newspapers have started giving downward projections for Indian markets. This for us is bullish when combined along with other technical indicators.

In short, the bias is now positive over near term as long as yesterday’s opening gap between 4600 – 4550 is unfilled. A move above 4800 will provide further positive confirmation that we have started a move up till 4950 – 5000 levels. However, a follow-up rally will provide more vital information if we are indeed in for bigger rally or the entire up move from 4540 was just corrective 3 wave structure.

Waves Capital: Elite market Forecasting and Research House in India

2011-12-10T13:00:00.002+05:30

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