Trade Set-up 01-03-2012

How can we go down?

We can not go down as ABC.

If we label the 3 wave down-move from 5629-5268 as A then we can not go down because a 3 wave A means that Corrective ABC (as a whole) can be either a Flat or a Triangle.

For a Flat, B has to retrace 90%-138% of A;

For a Triangle,while an Expanding Triangle warranted much bigger B & C, the Contracting version would be something like--- shown below:

But we can definitely go down as WXY:

Now taking this Probability further,let us go inside this Y, presumably started from 5459 downwards:

Y.a ( from 5459 to 5352) has completed 3 waves so far:

5459-5400=59

5400-5436=36

5436-5352=84(142%)

If Y.a is complete then Y.b has to retrace minimum 90% of it that is come to 5428 before Y.c can come down.

If Y.a is incomplete,i.e. it has to complete a 5 wave form then its 4th subwave(currently in play) would not go above 5436 in any case and an extended 5th wave down-wards would follow and would do 85-96 points from its beginning.

Let me illustrate it in charts:

Thus a tick below 5352.65 can be used for initiating shorts for target of 95 points for (v).

Otherwise remain long with SL at 5352.65 for first intraday target of minimum 5428 and on a tick above 5436,positional target of 5600 should be kept in sight.

Conclusion: Watch 5352.65 and then label ABC or WXY for targets.
And the following channels may also prove useful:

Raghu

Nifty:EOD 29.2.2012

Yesterday only I had mentioned the foxiest of all waves being B of W4 and today we got the demo.
One would need to have great conviction in this market and that conviction would come only from your own analysis. Best advice, they say, is not to follow any advice.


5350 survives and the down move from day's high of 5459 to day's low of 5352 is again a 3 wave form.

Gap ups make it difficult to find fractals in small degree but then one has to learn where to put the Trailing Stop loss.If anyone asks me to provide the ideal fractals for a and c above,I may not but if anyone argues that a & c were not Impulses, I would ignore him and move ahead with my trade set-up. I have seen people discussing EW passionately and toying with various probabilities but basing their trade on "gut-feeling" which is nothing but the reflection of sound/noise around ---.

Coming back to EW, one set of abc(5268-5384-5351-5459) is over and the second set of abc(5459-5400-5436-5352)also is discernible.
Easiest labeling would be calling the first set of abc as W and second set of abc as X and then vouch for Y (another abc) to take us Up and W4B, thus progressing as a Double zig-zag in following manner:

Alternatively, the abc (5268-5459) may be labelled as A of W4B with B of W4B coming down to sub-5300 levels and then C of W4B going up again to make W4B a FLAT ABC, in following manner:

 By keeping a SL for longs at 5350,I had chosen for the first alternative.
By mentioning the second I have indicated to you to be ready for it as well and keep watching momentum indicaters as well as crucial levels to understand how Nifty would move--

Raghu

After the Gap-up opening:29-02-2012

W4 has its B in progress.Momentum upwards has been more than expected so the gap-up.
And this gap-up has altered the labels:

This B of W4 can take up various forms---WXY or simple abc.
Important however is destination--near 5600
And Stop-loss for longs--now at 5350.
Use all dips to go long.

Raghu

Trade Set-up for 29-02-2012

First of all my Preferred Count:

And a look within each of these arms:

Now we have Two Probabilities
1.Either W4 (of current upmove from 5268 )is over at 5354 or is playing out a combo whose W(downwards) and X(upwards=5354-5391) have played out and Y downwards(as abc) is in play:

OR
2. W4 was over at 5354 and currently W5 in play as a Diagonal:

And now comes the best part.
As W1= 73.5, for this wave to become a perfect 5 wave,W5 can be 45.5(so as to make W1 extended) so W5 can not go above 5400.

Thus 5400 may see a retracement for the above discussed Fiver(5268-5400=132) which would bring it down to 5350(38.2%),5334(50%) or even 5318(62%).
USE THESE DIPS TO GO LONG WITH SL AT 5306.


Raghu

Nifty :EOD 28.2.2012

Yesterday's EOD post had following labels on chart:

And I believe that C ended at 5268. In support I put up the following chart:

The blue channel indicates the lower degree 5 subwaves of C and upper red trendline denotes the tentative boundary for corrective ABC.

Also the form of today's upmove(5268-5391) speaks out that it is not (iv) of C but a higher degree wave.

In today's chart,I have shown the downmove 5629-5268 as small letter abc instead of capital letters ABC as I consider the 3 wave zig-zag 5629-5268 as three sub-waves of A of W4 with B and C to follow.

The probability of W4 having ended as a 3 wave ABC at 5268 is being kept on backfoot as W4 has to be a  sideways slow moving wave(though A of W4 can be fast & furious).

And so the upmove from 5268 is being seen by me as B of W4.

And my Guru wave-rider says that B of W4 is foxiest of all waves.

So get ready for volatility and boring,grinding moves in different bouts and avoid  taking positions for intra-day scalps.

Conclusion:

W4 in play as ABC.

A of W4 played a zig-zag and now B in play.

W4 playing out as a Flat or Triangle means B retracing 90% of A so testing 5600 is very much on the cards.

Raghu

The 2.30 PM post(28.2.12)

Markets,as usual returned from the brink.
The downmove from 5629-5268 remains a 3 wave form
a=5629-5461
b=5461-5537(ended at 5521)
c=5521-5268

And I would treat this abc as 3 subwaves of A of W4.
B upwards is in play.
All it foretells is that we shall oscillate in 5629-5250 range for some more time as a 3 wave A foretells a Flat W4.
And this B seems to be playing out as:

So now long at dips for the B should be the policy.

Raghu 

Trade Set-up for 28.2.2012

So far we have labelled the Impulsive upmove from 4531 as follows:

And I have been mentioning for quite sometime that whenever W3 is more than 300% of W1,my observation has been that W4 and W5 get subsumed within it. However, following IDEAL COUNTS, it was important that I count the downmove from 5629 as W4 till it confirms otherwise.
And on Monday dt 27.2.2012,we have come very close to confirming that the downmove may actually have to be labelled as not W4 but something else.
Although the price-wise confirmation of the down-move not being a W4 shall come below 5250,there are certain other "pointers" which have already said so:
1.Fourth waves are characterized by their sideways,griding ,boring nature whereas current down-move is too fast & furious to be called a fourth wave;
2.Correctives as zig-zag are often fast & furious but these zig-zags remain confined to a channel. However such a channel has also been broken in the current case:

3. As mentioned in yesterday's post,W4 normally terminates near the terminus of subwave four of W3 (in this case at 5323) but it has come much below that.

And the current labels are are looking stretched, illustrated in chart below:

C(=253) has already done 150% of A;
C3(=187) has already done201%  of C1(=93);
(iii)(=178) of C3(in play) has aleady done 363% of (i)(=49)

But theoretically we would be able to call the current downmove as Impulse(subwave of higher degree Corrective) only when we come below 5250 as then C=5521-5250=271 would become 1.618 times A=5629-5461=168 and qualify to be called as Extended 3rd wave of the Impulse started from 5629.

Thus ,a tick below 5250 and all rises to be shorted for target of 5080(50% of the upmove from 4531 to 5629).

Raghu 

Nifty : EOD 27.2.2012

I had mentioned in my post Trade Set up for 27.2.2012 that outside boundary for W4 was broadly at 5323 as per the guideline that W4 would not go below the subwave four of W3.
But today I am giving some more leverage to my label of W4 as
1.Subwave four of W3 is not well-defined( as fractals of W3=4588-5629 are not very clear);
2.W4 as zig-zag can do upto 5250 if we go by its subwaves ABC where
A=5629-5461=168;
B=5461-5537(ended at 5521);
C can do upto 1.617*A for a zig-zag ABC ( and as sson as it does 1.618*A or more it becomes extended wave 3 instead of C).
And we are very close to this relabelling.
In fact I have gone long in closing minutes with SL at 5249 because if it is indeed a W4 then ensuing W5 can give me solid returns and if it is not W4 then the SL so close would minimise the loss.Thus risk-reward prompted me to go long in closing minutes(very much against momentum).
And charts:

What if we go below 5249?
That would CONFIRM that the Impulse started from 4531 had indeed ended at 5629 and the current down move should be taken as Corrective to that Impulse(4531-5629=1098) and would retrace 50%=5080 or if it retraces 62% then 4950.

Raghu

Nifty: The 2.30 PM post(27.02.2012)

So 5323 did not hold.So should I label the current downmove as W4 or not?
I am giving it some more leverage and taking 5250 as the point to change that label.Why?
Because so far:
A=5629-5461=168
B=5461-5521
C=5521-5293*

only when this C does more than 1.62*A can I DEFINITELY say that W4 is not there.Till then I would count it as W4 as zig-zag.

So longs only near the end of (v) of C as depicted above.(aprox.5255)
Till then short is the way.TSL for shorts now 5428.
Otherwise sq them off around 5260.

Raghu

Trade Set-up for 27-02-2012

Trust all of you would have gone through the W4 post in Special Updates section.
For those who missed it, here is the link: http://ewcountsatniftyparadox-specialupdates.blogspot.in/2012/02/wave-4lets-get-into-its-details.html

Now on the basis of those details,the outside boundary for (W4 currently in play) gets bound above 5323.
A tick below it would lead me to remove the label of W4 and substitute it by the label of Corrective to Impulse 4531-5629 (=1098) and give me the targets of 5080(50% retracement) and 4950(61.8% retracement).

But currently , let me talk about it as W4 (with subwaves ABC) of  which apparently  A and B have played out and C is in play in following manner:

A=5629-5461=168
B=5461-5537(though ended at 5521)
C=5521 downwards--
and after considering various counts like:

I feel inclined to choose the following labels as my Preferred Count:

And most likely opening as per this count is between 5422-5455 and should be used as a shorting opportunity with SL at 5455.1 with Target 1 as 4385.
And even if we open below 5406 wait for rises to short with SL at 5455.1

The wave form taken to test 5385 would guide us further.So watch this space.
I plan to post an Intra-day update as well at 1.00 PM to discuss further probabilities. 


Conclusion:
1.Short at rise till 5455.1 for target ranging from 5385-5323.
2.20DMA at 5382 ;weekly pivot at 5388 ans weekly support at 5346 are other probable support levels that need mention.
3.Longs should be created in 5335-5350 range with SL at 5323.


Raghu

Nifty:EOD-24-02-2012

Today  morning's Trade set-up was the most detailed EW analysis of small degree waves posted by me on this blog.However there is one 75 year old person with whom I used to do such detailed analysis very regularly--Sh. Chandra Ranjan ji Gaur.
And it is the "practice sessions" done with him that I am able to follow EW chart patterns and rule out probabilities as the live ticker prints mkt-patterns on my monitor.
Despite the detailed post about the Corrective(from 5461 upwards) to the Impulse(5629-5461) today morning,one small thing was not mentioned.
A=5461-5537=76;
B=5537-5473=64
C was said to go above A(5537) and most ideally 5549(C=A) then what was missed?
That minimum for C was 0.62*A=47=5520 was the minimum that C had to do : and this needed a specific mention which got missed.
Though I recall my FB friend Atul Harkut's comment on facebook group where he asked:
"wave B(a): 5460-5537=77, B(b): 5537 - 5473 = 64 so shorting points becomes c=.62a= 5520, c=a=5550, c=1.62a=5598....am i correct??

 And that gives me confidence that some of my friends would definitely have used this level of 5520 for shorting (and succeeded in catching the top) as I missed it.

Now getting on with our Counts:

Currently I am treating this Down move  from 5629 as W4 of the Impulse started from 4531 so on that degree we currently stand as follows

As

W1=4531-4800=269

W2=4800-4588=212

W3=4588-5629=1041

W4 doing minimum 23.6%=244=5385 and that matches with our 20DMA target (currently 5382)

And so far,this W4 as ABC has done:

A=5629-5461=168

B=5461-5537(though ended at 5521)

C=5521 downwards in progress and ideally it should do (as C=A) 5353 and minimum(C=0.62*A)5417.

As we have done 5406 today,so minimum C has been done but minimum W4 remains to be done at 5385.

And this was the reason for my not being comfortable going long towards the session end(despite my Guru Wave Rider expressing the possibility of gap-up on Monday)

See you all on Monday morning.Have a nice week-end.

Raghu

Trade Set-up for 24.2.2012

First of all a look at daily charts:

The gap at 5460 acted as support today. May not hold tomorrow --Nifty closing below 5 DMA for second consecutive day tells us that it is going to test 20DMA(currently at 5368) definitely so positional shorts can very easily hold on till that point. .Thus for tomorrow the safest trade would be to short at rise with a stop-loss at 5629 and target 20DMA.
Now the EW part.
One Impulse(a 5 wave form) has played out from 5629 to 5461=168 points.
Corrective to it,so far has done ,5461-5537=76 (45%)
Now percentage-wise this is enough for the next Impulse to start(from 5537 downwards) for a minimum 104 points(taking us to 5433) or ideal 168 points(taking us to 5369).

Only one thing to confirm---form of this Corrective(from 5461-5537).And that is where subjectivity steps in.
If this 5461-5537 was a 3 wave form then the probability of fresh Impulse to the down to have started are very high(though not 100% as even a 3 wave form may be only a part of 3*3*5 flat).
And if this 5461-5537 was a 5 wave form then an upmove should start from where it is at present i.e.5473 to take it past 5537(a zig-zag where a=5461-5537=76(5w);b=5537-5473 and c upwards by 76=5549).This zig-zag may complete the Corrective(as a 3 wave form) to Impulse 5629-5461 and fresh Impulse downwards would start.

So lets look at the form that this 5461-5537 has taken:

And let me put up the chart and both the probabilities so as to choose one:

As such,the 3 wave form looks perfect.But a look inside C shows that it does not fulfill "properly" the criterion of a 5 wave form(none of  its 5 sub-waves is extended).

So now lets have a look at the 5 wave form:

Here also the same issue. Although the 5 wave form looks perfect,inside 5th wave,the sub-waves have same problem as in C earlier(none of its 5 subwaves is extended).

So that leaves the field open----and both the probabilities also.

Now going by my thumb-rule that  when the Impulse took one & half trading session, Corrective should take more time ---I prefer to go with the 5 wave option for the up-move 5461-5537.

Now lets see the down-move so far i.e.5537-5473--- is it a 3 wave or 5 wave?

And that makes my job much easier.
All important point is now 5470.3

If we donot tick below 5470.3,we would go up to do a 5*3*5 Corrective to Impulse(=5629-5461) of which one 5 was 5461-5537;3 was 5537-5473 and last 5(upwards)remains to be played.

And if we tick below 5470.3 then in all likelihood we would slide to 5368(20DMA as well as the ideal target for a zig-zag to the down).

Conclusion: 
Long above 5470.3 for targets above 5537(upto 5549 ideally) and then Short near 5549.
Short at all rises if we open below 5470.3 
Target 5368(20DMA)

Raghu

PS:Aaaaaaaaaah,a long post but I have tried to delve deep into EW.May not be able to delve into so much of details always---so learn as fast as possible to relieve me and take over from me.

Nifty: EOD 23.2.2012

Fantastic day as my FB friends would agree.
Being on the correct side of EW labels got us good returns as Feb premia were minimal.
And the chart which did wonder was:

And I end the day with following self explanatory chart:

See you all in tomorrow's morning post.

Raghu

Trade Set-up for 23-02-2012

After mentioning the alternate labels in EOD 22.2.12 post,I have chosen to follow the following label for my trade set-up for 23.2.2012

(i)=5629-5574=55
(ii)=5574-5606=32
(iii)=5606-5491=115
(iv) upwards may do 38.2% of (iii)=44 or may be more but remain confined within the channel tentatively shown here. And the form of this (iv) might be complex as (ii) was simple.
(v) to the down again.

And after this 5 wave form gets completed,again an upmove --a 3 wave form of higher degree--would start which may very well retrace upto 80% of the 5 wave form mentioned above.
Thus a volatile session ahead.
Tight stop losses may cause whipsaws so my advise is:
keep a bearish bias with stop-loss at 5630 and target 5427.(we may see it tomorrow or day after)

Raghu

Nifty:EOD 22-02-2012

So the much awaited Corrective was here today.And seems to have played a perfect 5 wave form so far(5629-5491):

Though on the basis of less time taken by (iv),it can be very well argued that it is the (iii) that has ended at 5491 and (iv) and (v) have yet to play out.And in that case ,the labels would appear as

And as a Corrective on the whole has to be a 3 wave form--termed ABC--,enthusiastic Bears would say that the above played 5 wave form is only A of the Corrective and ,ideally speaking, we are in for a zig-zag ABC(as other Corrective forms have A playing out a 3 wave form) so more downside is left after B plays out its upmove.
This B to the up may play 38-80% retracement.
Then C to the down --ideally by as much as A.

Now there is a rider to the above Probability.
As my Guru Wave Rider ji mentioned,this 5 wave(played out today)may be C of an expanded Flat in following manner.

Though I need to mention here,A in the above chart needs to be a 3 wave form for an ideal Expanded Flat (which it is not) but it still need a mention here as it comes from my esteemed Guru. Otherwise also,all of us have seen Nifty chartering not very IDEAL paths & patterns.

Now a look at Momentum Indicaters.

For the first time after 30.1.2012,Nifty has closed below its 5DMA

Raghu

Nifty EOD 21.2.2012

At times I feel that going into pattern of small degree waves proves so fruitless--like today. In my trade set-up I had mentioned that at smaller degree the downmove of Friday looked like A of corrective ABC as within this A,(iii)>1.62*(i) and so whatever be the length of B(to the up),C to the down would come doing at least sub-5545 but it was not to be.May be at the smallest of degree,corrective in some other pattern took place which we failed to recognize and that corrective got over at 5545 itself.
Posting the 30 sec chart of this down-move from 5606.65-5545.55 so as to find out the Corrective pattern in it.Can somebody give some input?(though it is more of an academic exercise as mkt. has already moved ahead--)



And at the higher degree,momentum remains the guiding light.
Quoting from my previous post:
Q

So we are still in W3 and our count stands as:
W1=4531-4800=269
W2=4800-4588=212
W3=4588-5541 and this W3 is capable of doing upto 425% of W1.

Though it has been my observation that whenever 3rd wave does more than 300% of 1st wave,wave 4 and wave 5 get subsumed within it and so now the probability of W4 and W5 occurring has become minimal.
But where shall this W3 end?
Probable levels are:
3.764*269=1013=5600(already done)
4.00*269=1076=5664
4.236*269=1140=5727
Combine these probable points with momentum observation to take positions--
UnQ

And Momentum on daily scale has not shown any let-up in upmove as yet.The channel below shows how steep this rise has been and after 4588 ,the fractals are not discernible (to me at least).That is why simply saying that it is 3rd wave to the up in play.And it does sound strange that no proper fractals for this upmove of 4588-5621* ---






Raghu

Trade set-up for 21.2.12

First of all ,a look at Momentum:
First the Hour chart:


A close below 5HrEMA is the first sign of downward momentum building up.
But it can be foxy as on the daily charts the Higher-high/Higher Low candle is telling us that on daily basis you should not be bearish at all so there was a clear-cut indication that Short positions SHOULD NOT be carried over to the next day.

Now let us have a look at the wave-pattern of very small degree(Intraday)that developed after making a top at 5606.65.




A of the Corrective ABC has done 5606.65-5545.6=61 so far

Now the important pivot point(EW wise)is
End of (i) at 5577.7
a tick above 5577.7 would tell us that A is over and B is in play.

As this Corrective ABC is likely to play out as a zig-zag(Indication being A having played a 5 w form), B can not go above 80% of A.
So if in the morning we open above 5577.7 then B upwards can do at the most 49 points i.e.5594.
So shorts should be developed around 5590-5594 levels with Stop-loss at 5607 and a target of 60 points (for C).

So EW wise the first move during the day would be in 5594-5530 range.

Therafter,the Momentum build-up would dictate the pattern.
And just remember: momentum over higher time frame(daily) has to be given more weightage than lower time-frame(Hourly) so advisable trade as of now remains Buy at dips.
A dip below 5480 ,however,would give more weight-age to a Corrective of higher degree having set-in and in that case donot hurry to go long.

Raghu

Nifty:EOD 17.2.2012

First of all let me put up the most notable aspect of today's EOD chart:



Although it needs confirmation but it has the potential of being developed into an evening star.

Those who are following my blog on regular basis,know that we have two Probabilities on Higher degree:
1.That Correction started from 6339 (Diwali 2010) has not ended yet and current upmove from 4531 is wave C of X which is developing as an Exp Flat from 4728 upwards:
X.A=4728-5400=672
X.B=5400-4531=869(129%)
X.C=4531 can go upto 5618(=1.618*XA)
2.That the Corrective from 6339 has already made a bottom at 4531 and we are into Ist Impulse of the fresh wave that has started from 4531 upwards.

I am inclining towards Probability 1,because I have not been able to assign a convincing labeling for the Corrective 6339-4531 to have ended at 4531 and am more comfortable with Probability 1 counts which are there in Special Updates section now for quite some time.
And as a breach of 5618 would invalidate this Count,I have been referring to 5620 as last post of Bear Hopes.

A common point of both the above Counts is that both these are seeing upmove from 4531-5607* as Impulse(though my Guru Wave-Rider ji has been counting it as abc-x-abc-x-abc---)
And this Impulse has to have a Corrective also.
So the differnce between the two counts is the depth of this Corrective.
While Probability 1 takes it below 4531;
Probability 2 says that after the Corrective(which shall not take us below 4531)we shall rise like a phoenix and make new highs.

So much for higher degree Counts.

Now coming to current Impulse,as I mentioned two days ago also,there have been only two SOLID reference points so far in this upmove:
W1=4531-4800(269)
W2=4800-4588
W3=4588-5607*=1019(378.8%)

And there was another pausal-point at 5078 which was taken by me for few days as end of W4 and beginning of W5 but the move above 5458 invalidated that.
And as I have mentioned earlier as well,it has been my observation thatwhenever W3 is more than 300% of W1,a distinct W4 and W5 become difficult to be figured out and I take them to having been subsumed within W3.
Something similar seems to have happened here as well.
And that,in a way,also explains why at times fractals of W3 (or W5) were not able to be correctly labelled by me.That also has a lesson within it --- never treat EW as a single,stand-alone tool.Momentum must be seen alongside it.
However,another stark observation for me has been the special points--EW pivots as I call them---help us to set up trade on basis of EW. 3-4 days ago,I had mentioned 5444-5455 as shorting range with SL at 5458.Nifty opened above 5460 to tell us that momentum is not by our side.Similarly,for today I has mentioned that if we donot go below 5510.45,our chances of going up by minimum 1.62*26.6 are very high but we should not go above 5575.And we opened above 5575.Thus these sharp EW pivots not only tell us very early that we are on wrong side of trade but also prevent us from starting the trade.

Have a nice week-end.See you all on Monday evening/Tuesday morning with my trade set-up.But ,then let me post a brief understanding of today's down-move:




Raghu

Trade Set-up for 17.2.2012

The Correction seen on 16.2.2012 has shown a small 3 wave form so far( as mentioned in EOD post).This Corrective can be followed by :
1.A 5 wave Impulse of the same degree;
2.A 5 wave Diagonal of the same degree( as I am looking at it as the last sub-wave of either W3 or W5 of higher degree);
3.This 3 wave Corrective of smaller degree may be part of a Corrective WXY wherein W & X have ben played and Y remains and after this WXY we may come up as an Impulse or Diagonal to cross 5541;
4.This small Corrective may be beginning of a Corrective of higher degree.

I have always maintained that EW gives very sharp points as far as exit is concerned.Now this exit can be either a Stop-loss or squaring off.
Now lets take tomorrow's example with following chart:



Two important points in the above chart are:
Top of sw1=5510.45;and
Bottom of sw2=5488.25

If sw1 top is not breached,then sw5 upwards will do minimum 1.62*sw1=43 points as a normal wave with Extended sw5.
If 5510.45 is breached then chances of a Diagonal being in play would come into play with sw4 overlapping sw1 but not going below 5488.25 and then coming up to do an sw5>sw3.
And if 5488.25 is also breached then following option would come into play:



In this option,the downmove from 5541 is seen as continuing as 3*3*3(or WXY)wherein W=5541-5484
X=5484-5530.8
Y down to take any 3 w corrective form(not necessary to be a ZZ).
And in this option important level(as Stop loss is 5530.85)

In view of the three probabilities how to set up a trade?

As you would have noticed,upside being mentioned in first two probabilities is 45+ points.Which to my understanding should not go above 5575[(v) of SW5 can not do more than 425% of (i)=55].


Set up a trade based upon opening vis-a-vis the above mentioned levels and risk-reward.

Raghu