Nifty has been moving with high volatility and gaps since past few sessions. It becomes important to capture the trend from the low and ride it during such times. While many traders turned bearish when the Index made a low near 10140 we have been expecting a reversal on the upside.
During such volatility it becomes difficult to identify the right trend and ride it. We have been successful in capturing the trend from 10480 with the help of Elliott Wave and other indicators.
Below is the chart we published in our daily report “The Financial Waves STU” which shows how we captured this reversal.
Nifty60 mins chart:(Anticipated as on 15th October 2018)
Nifty60 mins chart: (Happened as on 15th October 2018)
(Below is an extract of research published in our daily research report published on 15th October 2018 morning)
In the previous trading session Nifty witnessed a gap up opening and prices moved towards higher level throughout the session making a high near 10492. In the past week prices witnessed a huge movement within the range and we did not see any close below or above the range 10200-10480. During the last whole week we saw intense movement and Gapping action. During such scenario it is very important to know the crucial levels and understand the reversal areas. One has to be very quick in changing stance from bearish to bullish during such fast moving markets and not be one side of the trend.
The beaten down stocks like DHFL, Yes Bank have managed to protect the important lows and showed recovery which indicates buying emerging at lower levels and also short covering. Also we are seeing positive divergence between Bank Nifty and Nifty Index as Bank Nifty was leading the fall previously but it managed to protect the lows even when Nifty formed fresh lows near 10138 levels.
On the downside now an important support is near 10200 and prices have closed above this low which indicates that we might have reversed on the upside. Buying on dips strategy can adopted but looking at volatility the Index might not provide much time and might show a strong move post which people will relate the move to falling crude prices and appreciation of INR. Also if we look at the RSI indicator we are seeing reversal exactly from the zone of 20 which was during the fall of 2017.
As shown on hourly chart, Friday’s session was an important day and we are now near the upper end of the range. Breakout above 10480 – 10500 will extend the up move further. We are also showing ROC indicator on the hourly chart which is showing positive divergence on the chart. Prices have completed wave e with the completion of triangle pattern and now the next leg on the upside might be starting. A close above 10480 one can expect follow up buying to emerge and prices are expected to move towards 10750 which is 38.2% retracement of the prior fall.
Happened: The Index moved as expected and made intraday high of near 10710 levels in today’s session. A novice trader might think of missing the last 30 points but an expert trader knows how to protect the profits of nearly 230 points on Nifty in just over 2 days’ of time.
Post the sharp reversal on downside from here what is next for Nifty?
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