Nifty EOD 30.11.2011

My today's morning charts,after a lot of deliberations on 5 min,15min,30 min & hourly charts had proposed the following counts for today:

However,the very first tick on Nifty( opening at 4766) invalidated this count as below 4771 was not allowable in this count( A3(iv)entering A3(i) territory).

It confirms again that the foxy nature of 4th wave for which a range of 4640-4920 was easy to define but the pattern to be played within this range is most difficult to decipher.

So here I am with a clean slate again:

Many Counts have been proposed for this pattern by my peers.Most popular being the following:

However a 3*3*5 zig-zag(as A) is not acceptable to me.

So I prefer to keep my slate of pattern PLAIN AND UNCOUNTED and would prefer to wait for one-two more days before coming out with a convincing set of Counts.

Raghu

Nifty:Beginning 30.11.2011

This is yesterday's 3min Nifty chart and I am not able to conclusively say which wave comprises of 3 sub waves and which one comprises of 5 waves.

So I shift to a 15 min chart:

and find it better. Lets look at 30 min chart now:

It does not confirm the 15 min chart where in the middle wave(4803-4866)was coming as a 3 wave but here it is not qualifying as a 3 wave.

Now lets come to Hourly chart:

And it clinches the issue for me.

This whole exercise has been illustrated to demonstrate the difficulties & pit-falls in arriving at the correct labelling( and still there is no gurantee that THIS IS the correct one) and now we have to fit it in the previous Counts:

Thus it alters the Counts given in yesterday's EOD post which now stand corrected as:

Wave A(5 wave from):

A1=4639-4708=69

A2=4708-4669=39

A3 in progress as a 5 wave;

Can be anything from 1.62*A1 to 4.25*A1 (i.e. from 112 to 294) so far:

(i)=4669-4771=102

(ii)=4771-4693=78

(iii)=4693-4864=171

(iv)=4864-4787*

(v) to the up by 102 points likely today.

Raghu

Nifty:EOD 29.11.2011

Starting with yesterday's chart:

And now putting today's chart alongside for easier comparison/continuation:

And so our fractals for Corrective SW4 now stand as:

Wave A(5 wave from):

A1=4639-4708=69

A2=4708-4669=39

A3=4669- 4866=197

(i)=4669-4771=102

(ii)=4771-4693=78

(iii)=4693-4864=171

(iv)=4864-4803=61

(v)=4803-4866=63

A4 in progress, 4866 downwards and most probable target for it=38.2% of A3(=197)=75=4790

although the downmove has tested 4787 but not as a 3 wave but as a part of a 5 wave:

May be SW1 of a 3 wave A4 is in progress as a 5 wave form and should be ideally ending at 4785.

Thus tomorrow may be a day when A4 will fan out beteen 4780 to 4870.

Now lets have a look at the Daily Nifty charts as well.

And on seeing the Daily Charts one may very well argue that SW4 is over in following way.

I would not argue---EW has subjectivity inherent to it.

And, therefore, I always say:

"To each his own"

Raghu

Tata Motors: An EW Perspective

Above Count has a lacuna.

It is showing ABC as a zig-zag with A being a 3 wave. As per my manual EW Principle by Prechter & Frost, a zig-zag has to be 5*3*5 and if A is a 3 wave then the corrective should proceed to do a Flat.

As we donot have a Flat in the making, we have to say that a Double zig-zag should be in the making with following labels:

So currently we have Y.B in play as a zig-zag(5*3*5) which should logically take us past 208 but not above 216.

Raghu

Hindalco Charts:An EW perspective

Above chart is self explanatory.Only point that I wish to emphasise here is that as W3 was a huge extension over W1, W5 might get truncated and so a low for A might be in place already.

EW & Candles: Follow-up on Mundra Port

On Friday,I had put up this ostensibly Bullish Engulfing Candle chart of Mundra Port and after

seeing it in EW microscope

commented:

Q

Thus there seems to be no more space for further upmove as a 3 wave zig-zag is nearing completion.

UnQ

And see what happened today--- though Nifty moved up by 150 points,this stock barely moved.

Although the main purpose of this blog-post was to illustrate how EW can help in confirming or negating the indications given by Candles, it would remain incomplete without answering the "natural query" -- Should it be shorted then?

Yesterday I had given the answer-"YES with a SL @129" and proceeded to give following count as the "reason":

Q

So it clarifies that the upmove noticed on Friday was a sw4 of the downmove( 5 wave) started from 139.8 on 18.11.2011. Making the count as:

UnQ

But today I would not be that categorical as market prudence in view of huge upward momentum as well as the extended 3rd wave(325% of 1st) suggest that the "ideal" 5th wave may not occur at all at such a small degree(compensated by hugely extended 3rd.

-Then what should be done?

On hourly charts this abovementioned Count looks like:

And the count now becomes:

139.8-132.55=7.25

132.55-139=6.45

139-115.4=23.6(325%)

115.4-127.4*=12( 50.8%)--as a 3 wave form.

Thus this 115.4-127.4=12 has retraced more than 50% of its prev wave. A bit incongruent as its retracing more than 38.2% was difficult. Also its internal fractals now suggest (pl see chart above) that going above 128.8 would mean its turning into a 5 wave.

So all shorts to have a SL at 128.85 and one should go long above 129.

Very detailed explanation has left me exhausted so more of it on some other occasion.

Good Nite.

Raghu

Nifty EOD 28.11.2011

So of the alternative probabilities mentioned on Friday,one got matured today and it was:

Today's Nifty move was bulid on this Probability and we are in a 5 wave A form which has following labels:

And so our fractals for Corrective SW4 now stand as:

Wave A(5 wave from):

A1=4639-4708=69

A2=4708-4669=39

A3 in progress as a 5 wave;

Can be anything from 1.62*A1 to 4.25*A1 (i.e. from 112 to 294) so far:

(i)=4669-4771=102

(ii)=4771-4693=78

(iii)=4693-4859*=166(163%) thus A3 has covered 190 i.e 2.75*A1 and here we have to take help from classical TA as this (iii) has done the minimum 1.618*(i) prescribed by EW but max. limit mentioned in EW analysis says that it can go much further.

So lets come to the Daily Nifty chart:

While this upmove has breached all "preliminary " trendlines & channels shown in the chart,one resistance band of 4885-4915 is expected to "contain" this A of SW4.I suggest to all fellow readers not to take short positions in anticipation.

Raghu

EW & Candles: Let's throw more light

Trying to start something new. Something which would be not only educative( the main purpose of this blog) but also fruitful. Shall be analyzing at EOD whether the suggested trades were fruitful or not and ,if not, where it failed.

First trade is Mundra Port & SEZ where the Bullish Engulfing Candle( though it fell slightly short of clearing the previous day's high) attracted me and looked like a potential candidate for going long.So decided to have a deeper look with my EW microscope:

So it clarifies that the upmove noticed on Friday was a sw4 of the downmove( 5 wave) started from 139.8 on 18.11.2011. Making the count as:

139.8-132.55=7.25

132.55-139=6.45

139-115.4=23.6

115.4-124.8*=9.4( 39.8%)

Thus there seems to be no more space for further upmove as a 3 wave zig-zag is nearing completion. A look at volumes also shows that a negative divergence is there as the increase in price is not accompanied by increase in volume.Thus it is not a candidate for going long at this stage.

THEN IS IT RIPE FOR SHORTING?

I'd say YES with a SL at 129 and for target below 115, this stock should be shorted around 125.

Now,lets take the second stock of the day: MARUTI

A Bearish Engulfing Pattern after an obvious looking 3 wave (upward)retracement.

So the stock gets confirmation from EW angle also for shorting. Hourly volumes also are showing increase as the stock's price is falling,further confirming the negative bias in stock.

A SL at 999 should be used and a pull back on Monday should be utilised for initiating Shorts with target of 900.

Incidentally Mundra Port was one of the highest gainers in Junior Nifty stocks & Maruti was one of biggest losers in Nifty stocks.

Raghu

Nifty:EOD 25.11.2011

Today's choppy & sideways move further confirmed the beginning of SW4. And as usual labeling its fractals and finding direction is not going to be very fruitful. For illustrating the pitfalls of labelling the fractals of this SW4, I have put up an unlabelled chart above which can be labelled in various ways:

And this is not about all.There can be combos in 3s(at all degrees) to make goings difficult for Intra-day Nifty traders.

Then what should be done?

I believe playing in individual stocks would be a better idea during this Nifty sideways move.

So would be posting a few of Stock ideas every beginning of the day ---

Raghu

Nifty: EOD 24.11.2011

So has the SW4 finally begun or is it again a small (one day wonder)pause like the previous day?

To answer that, I drew upon the 3 min chart so as to do a comparative analysis of the two upmoves:

Today's upmove was definitely sharper(indicating more momentum) but this might have been because of the Series Settlement also.

But I choose to go be the visuals and cast my vote for SW4.

So the Counts are:

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-4639=687

SW4=4639-- target 38.2% retracement of SW3

SW5 is likely to be truncated because of huge extn in SW3.

Thus my projection for December Series is that we may see a sideways move throughout between 4640-4920 leading to a base formation for Nifty( already in progress from 26/8/2011 onwards--

Raghu

Nifty EOD 23.11.2011

So once again the hopes of a(much awaited) retracement were belied and Nifty's yesterday's pause remained a pause and did not turn out to be the SW4 retracement.

In fact now the previous support bands of 4720-4740; 4890-4910;5150-5170 have become bands of resistance and the ease with with all these have been breached, shows the strength of negative bias that market has acquired.

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-4641*=685(351%) capable of doing max of 425% has looked unrelenting so far.

Have nothing concrete to suggest. So better leave it here.

Raghu

Nifty:EOD 22.11.2011

Has SW4 started?

Or is it (iv) of SW3?

No confirmation so far.Lets see in 3 min charts & Hourly Charts( only the upmove above 4764).

Discernible waves can be seen as:

A=4764-4854=90

4764-4824=60

4824-4801(4824-4783-4835-4801)

4801-4854=53

B seems to be in progress-- quite capable of doing 1.382*A=4730

Thus this retracement is not very easy to follow --- so one trade I suggest would be to go long below 4764(trendline suggests 4741) with a SL at 4728 and Target 1.6*A=140 points

And by this Count , expiry around 4885-4910 is seen

Raghu

Nifty:EOD 21.11.2011

Another example of getting caught on the wrong foot. Despite evidence of slowing down momentum on Friday, Nifty kept marching downwards and now:

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-4764*

and as this SW3 has a range of 1.62%-425%, it is anybody's guess as to where & when the downmove would stop.

Keep an eye on momentum indicators-- this is all I can say.

Raghu

Nifty:EOD 18.11.2011

First of all, some inferences are being stated EXPLICITLY. May sound blasphemous to hard-core EW followers. But these are based upon my observations & experiences and would become ( & may be have already become) part of my guiding lights:

1. Copy- book fractals like 5 sub-waves are not always found in Motives as the fast & furious momentum "eats" into them.So Fib percentages and momentum reversals have to be used to define the end of a motive;

2. In the absence of full 5 wave fractals,it remains a matter of debate to label the degree of the retracement that sets in at a given stage;

3. When a 3rd wave motive has set in, it is not possible to mention its end-point as it can be an extension ranging from 1.62% to 425% and other classical TA tools have to be utilised to figure out the probable supports/resistances corresponding to various probable Fib percentage extension points. But these also have indicative values as momentum of the motive can demolish these very easily.

4. Hourly Chart counts may not always get assimilated in the Daily Chart Counts and some "stretching" may be required to fit them in the Daily Charts,particularly in case of gap-ups/downs.

In such circumstances,any trade initiated in anticipation can cause much harm so best policy is to "join the party after it has begun" i.e. when the momentum indicators clearly show the reversal and the first "higher high higher low" appears on the 5 min charts, one should get in and start counting the fresh wave.

Now ,with these "explicitly stated" limitations of EW ( that is not to say that EW has no other limitations, more would be mentioned in future as & when "context" demands) lets move towards our count:

Till yesterday,our Hourly Chart was giving us following Counts ( and these were fitting very well into Daily Charts):

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-- downwards Target minimum is 1.62*198= 320=5006 as a 5 wave form :

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)= 5229- downwards, should ideally be taking Nifty to 4930 as a 5 wave form

5229-5121=108

5121-5159=37

5159-4990=169

4990-5065(4990-5065-4992-5036.55-5019).

5019-4919*

Today after the gap-down,this wave 5019-4919 went upto 4838 and as such,it shall not be possible to "cleanly" fit it into previous fractals.Leaving us with two options:

Option 1:

Consider (iii) of SW3 over at 4838 thus making (iii)=5229-4838 and (iv) having sarted at 4838 upwards,thus SW3 should be seen as

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)= 5229- 4838=391[212.5% of (i)]

(iv)=4838-4915* and retracing 38.2% of (iii) can test 4990 as a 3 wave form;

Option 2:

SW3 itself may be over, thus giving us the Count:

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-4838=488(250 % of SW1)

SW4=4838-4915* and retracing 38.2% of SW3 can test 5025 as a 3 wave form

Thus we have the uncertainty of labels,

but certainty of direction and targets--

Being a 4th wave Corrective, complexity would be inevitable-- a Flat form is more likely or a combo?

Nobody knows--

Best of luck.

Raghu

Nifty:EOD 17.11.2011

Yesterday's hourly charts had mentioned:

And today we hit it :

And while it feels good to mention the hits,can misses be left behind?

Definitely not. As it is the analysis of misses that would help us grow as traders. Moreover,the purpose of this EOD blog is to do post-mortem also.

Before hitting 4930,I was expecting Nifty to rise to 5077/5109. But it did only 5036.55 on the upside.

Lets see why those levels of 5077/5109 were mentioned:

And as happens so often,correctives are never that simple. The abc from 4990 actually took the following form:

And now what? While the target mentioned as minimum was met,how do we know, as my friend Shriramoka very correctly asked, that downmove is over(for this degree) and a bounce shall set in immediately----?

So lets have a look at the Counts as they stand now:

SW1=5400-5205=195

SW2=5205-5326=121

SW3=5326-- downwards Target minimum is 1.62*198= 320=5006 as a 5 wave form :

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)= 5229- downwards, should ideally be taking Nifty to 4930 as a 5 wave form

5229-5121=108

5121-5159=37

5159-4990=169

4990-5065*(4990-5065-4992-5036.55-5019).

5019-4919

As is evident,minimum lenghs of SW3 and (iii) of SW3 have been played out but is there any rule or guideline in EW that mentions that now a retracement to the up would set in?

Frankly speaking, I'm not aware of any such EW rule/guideline which would confirm a bounce-up from these levels. And that brings in the importance of trendlines , momentum and other tools that specify the support levels.

Using my most primitive TA knowledge, EOD charts( and one should use weekly & monthly charts as well) indicate a good support band at 4910-4915 levels.

Supposing we do bounce back from these levels, (iv) upwards should be counted as a retracement of (iii)=5229-4919=310, likely to retrace 50% and thus test 4919+150=5069---

Raghu

Matching Daily and Hourly Charts

In my endeavor to apply EW to the smaller degree and attempts to co-relate and amalgamate the Hourly counts with Daily counts,I have encountered quite a few pit-falls.Trying to share some of these with my friends here so that all of us can benefit:

1. Main benefit of following Hourly charts is the grasp that one gets over the fractals and it gives immense assurance to the Counter of being "in the know" of the things -- entering the trade at "correct" points,carrying on with the positions and squaring them off when the Fib percentage and wave forms match.

However,in case of gap-up/gap-down openings, Hourly charts give the feeling as if one has got lost. One or more of the small degree fractals gets assimilated in the gap and the (smaller degree) count goes for a SIX , forcing the Counter to rush to Daily Counts and find out where he stands.

Thus I always give the Hourly Charts and EOD Charts to help EW enthusiasts to overcome this particular problem ---

2. And now lets see how these two can be complimentary to each other. While Daily Charts show that minimum required criterion for sub-waves have been met, Hourly Charts help us pin-point whether the wave has run-up to its complete length or not.

And lets take the Current Count( which would be most relevant):

The Current Downmove from 5400 is being labelled(most simply):

SW1=5400-5205=195;

SW2=5205-5326=121(62%);

SW3=5326-4990*=336-- has now done 172% of SW1(more than the minimum 162%)

So the upmove from 4990 should be SW4 and do (ideally) 38.2%=129=5118

But is SW3 really over? Because 162% of SW1 is the minimum requisite,maximum can extend to 425%.

Here the Hourly Chart comes to our help:

This SW3 has to fan out as a five wave form,of which discernible ones are:

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)=5229-4990* in play and should, ideally be going to 1.62*(i)=4930(minimum)

Thus, if matched properly, the Hourly and Daily charts can become very useful guides for carrying on or squaring off our trades.

AND NOW THE DISCLAIMER:

It has been noticed umpteen number of times that momentum whipsaws the Hourly Charts(its extreme form being the gap-ups/downs mentioned earlier) and, therefore,it is always better to prefer EOD Chart over Hourly Chart.

In the current context also we may find the SW3 not going to the lengths indicated by Hourly Charts( and the daily charts shows the minimum criterion to have been already met) so be cautious with your Short positions and use hedges/SLs accordingly.

Raghu

Nifty EOD 16.11.2011

Choppiness at its worst( for retailers).High frequency logarithmic trading which can stump anyone looking for intra-day scalps. No wonder "jobbers" have become an "extinct" breed.

Anyways--- continuing with my counts:

SW1=5400-5202=198

SW2=5202-5326=124

SW3=5326-- downwards Target minimum is 1.62*198= 320=5006 as a 5 wave form :

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)= 5229-4990*(should ideally be taking Nifty to 4930 as a 5 wave form

5229-5121=108

5121-5159=37

5159-4990=169

4990-5065*(4990-5065-5030*)likely to test 5077/5105.

Shorts may be created accordingly for targets below 4990 with SL at 5122

Raghu

Nifty:EOD 15.11.2011

So now its clear that the downmove from 5400 is a 5 wave.

Hope the SL @5125 for longs would have deterred the readers from creating fresh longs in the morning as a low of 5120 was formed in the morning itself.

Also, it has brought to forefront the usefulness of doing EW counts alongwith trendlines & momentum as these two had clearly indicated a negative bias in Nifty.

Now the Counts stand as:

SW1=5400-5202=198

SW2=5202-5326=124

SW3=5326-- downwards Target minimum is 1.62*198= 320=5006 as a 5 wave form :

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)= 5229-5057* target is 4930

5229-5121=108

5121-5159=37

5159-5057*=102 expected to touch 4984

SL for shorts @5160

Raghu