Nifty: How Ichimoku Cloud can be combined with wave theory for forecasting?
Elliott wave, Neo wave are powerful techniques to forecast the markets. However, during complex market conditions it becomes important to combine this with trend following methods like Ichimoku Cloud that can provide exact entry level to capture the big trend.
Look at the below chart of Nifty plotted along with Elliott wave and how one can form a trend following system combining these methods together.
You can also watch my latest webinar on Nifty here – Power of Ichimoku Cloud
Nifty daily chart:
The above chart shows the Ichimoku Cloud plotted along with Elliott wave on a daily scale. For the first timer who is not used to looking at so many plots on a single chart might think it to be very complex. But by understanding each and every plot systematically might provide an easy way to look at the entire trend.
In the above chart if you look at the big fall from 11700 to the low of 10000 the blue line (also known as conversion line) worked extremely well. Whenever prices touched this line and reversed back on downside it provided the first indication that the downtrend is resuming. One has to go on a lower time frame for further confirmation of the trade setup.
On contrary, in the pullback currently ongoing in form of wave b (blue) we have seen prices respecting the red line (also known as base line) and did not close below it for more than two consecutive days. Everytime prices reversed back on upside. With today’s price action prices have again moved below the red line with first negative close. Now it is going to provide a trade setup if we see two consecutive closes below this line. Also one can now look at the shorter time frame to enter the trade provided one looks at the internal structure of Elliott wave pattern.
The above just shows how one indicator itself can provide very important information to derive the trade and when combined with Elliott wave – Neo wave pattern it becomes all the more powerful.
Nifty has now broken below the first line of defence near 10692 and now the second important support level if taken out will confirm the bigger degree down move has started. So, this is time to be alert and be watchful on this second level which is mentioned in the daily equity research report – The Financial Waves short term update. Get access here
We will not be able to explain the indicator in detail here but in the upcoming training on Elliott – Neo wave, Time cycles and Ichimoku Cloud these techniques will be covered in much detail and depth. To become an expert trader – you can register now for the same, Limited seats Avail early bird offer – Most Advanced Technical analysis training