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