Nifty: Higher Degree Counts

http://ewcountsatniftyparadox.blogspot.in/2012/06/nifty-higher-degree-counts.html

Lesson Learnt -1

In EW study, it always pays to co-relate the labels with momentum studies--- the most simple example is that of Price-RSI divergence when a wave is nearing its end.
I have been doing it with Hour and 15 minute charts and found it very useful in finding out the tops and bottoms many times.
But now I failed to find the bottom and was very convinced in my belief that bottom for B=WXY retracing A=4531-5629=1098 was found at 4988.
The main reasons were:
1. Ostensible completion of Y as a 3 wave form;
2.At 4988, 61% of A was retraced;
3.On hourly charts + cross-over and move into positive territory was indicating further continuation of upmove:

Then what is that one indicater that would have told us that retracement is not yet fully done?
I think for this degree of wave, my relying upon the Hour Chart proved to be my undoing.
For the retracement of this degree to be complete I should have checked the Daily Charts---

And the most elementary part in the daily chart- RSI- was not even in oversold zone.
And I was saying that B is complete---- quite stupid.
So now when we reach the end of newly labeled Yc( not even started as yet), We shall re-check this simple RSI before concluding.

Raghu

Following/locating Impulses

When I had started following EW study, I used to feel that Impulses would be very easy to follow as there were only two forms:
1. The 5 sub-waves form with mostly an extended 3rd sub-wave;
2. Diagonal with 4th subwave overlapping 1st and either sw1>sw3>sw5 or sw1<sw3<sw5.

But gradually, in the era of algo-trading it has not been so simple.
Gap-ups/downs and sharp intraday moves(where more than 100 points gain/drop occurs in 5 minutes) are becoming order of the day.
On 12.4.12 and 13.4.12 such instances dominated:

And let me try marking the Impulses one- by- one:

And last but not the least:

I had noticed these Impulse forms earlier also and tried to enumerate them as follows:

But my well-wishers had shrugged them aside for want of more literature from some "established & accepted" Gurus.
To that I would say:
"Haath kangan ko aarsee kya---?
( you are not expected to need a mirror for the ornaments in your forearm)

Raghu

Current upmove not to last beyond 5977

EW analysis has one inherent feature.

Every wave is a subwave of higher degree.

The Corrective started from Diwali 2010 from 6339 downwards is not yet over.

But its first subwave (call it A or 1) was over at 4531 after playing out a diagonal(6339-4531=1808)

It second subwave(call it B or 2) is in play and at the most will do 5977(80% of 1808)

As an EW follower, one learns everyday. On looking back,one cannot help smiling at one's (silly) mistakes in labelling. Tomorrow, I may do the same for the above labels.

Raghu 

Wave -4:Lets get into its details

Currently my Preferred Count is treating the downmove from 5630 as W4 of Impulse started from 4531 upwards in following manner(please bear in mind that if this downmove goes longer,its label may get change--how & when shall be mentioned later).

Trying to recall some of the guidelines for W4:
1.W4 will almost always be a different corrective pattern than W2(Guideline of Alternation);
2.W4 typically ends when it is within the price range of subwave four of W3;
3.W4 often subdivides the entire impulse into Fibonacci proportion in time and/or price.

As my attempt on this blog is to apply the wave-principles on live market, it is imperative that I get into details of W2(=4800-4588=212):

And at first I was inclined to treat this W2 as a simple Zig-zag in following manner:

But then rejected the above labels as a close look at C of the zig-zag revealed that it didnot fulfil the rule v>iii>i of the diagonal. Also B was coming out out to be too small for a zig-zag.

And on Hourly charts,the following labels looked more convincing:

 So delved deeper into it through 5 min charts:

It looked quite acceptable,though c of Z seems to have obviously failed.

Now we have three aspects of W2 ready with us:
1.Retracement percentage: It retraced 78.8% of W1(=4531-4800);
2.Form: It took form of a TZZ(Triple zig-zag);
3.Time: It took 5 days.


Now going by the Guideline of Alternation,W4 should
1.Retrace maximum 38.2% but chances of its doing only 23.6% become very high.
2.Form: Combos are least possible now.
3.Should take 3 days only,so Monday should see beginning of W5 upwards.

And going by the guideline "W4 typically ends when it is within the price range of subwave four of W3": This W4 should remain confined to 5323(tentative end of subwave four of W3)--see chart below:

(Though I must mention here that fractals of W3 are not very ideal).


Conclusion: If this downmove is W4,it should not go below 5323.
So fresh longs as well as previous longs should keep 5323 as their Stop-loss.

Raghu

PS: This is only the discussion for possible targets of W4 when seen as part of Impulse(from 4531 up). A microscopic analysis of its internal ABC would be done on Monday morning post---

Not above 5620:Nifty Counts(Updated on 9.2.12)

Today,31.3.2012, I look at these labels and feel a bit embarassed. It contains a very common mistake that many EW followers commit. Labelling ABC as a zig-zag wherein A is a 3 wave form.




But I donot expect it to cross 5460.
Why?
Because the upmove started from 4531 is being seen as follows:





Now as we move towards the last leg of the upmove,I have conviction to state that today's action would follow following pattern:
So far 5(started from 5078) of Upmove (from 4531)has done:
(i)=5078-5290(212)
(ii)=5290-5226(64)
(iii)=5226-5390(164)
(iv)=5390-5325(65)
(v)=5325-5380*

This (v) can not be more than (iii) so maximum it can do is 163+5325=5488;
Also for a proper wave form, this (v) has to be of a length wherein (i)=1.62*(v).
So (v) can be,at the most 130.5.
Thus maximum length for (v) comes to 5325+130.5=5455

Raghu

Nifty: Combining Hourly & Daily Momentum Reading

Dear Friends,
The upmove from 4532 to 5173* has kept us busy in revising our Counts from the basic ABC corrective to Double Combo WXYXZ to current Expanded Flat pattern.
And it was MOMENTUM that kept on guiding us that despite the EW Count indicating completion of upmove, reversal had not got initiated.
And on occasions where we were caught on the wrong foot,one simple miscalculation was---reading too much into Hourly Momentum charts and trying to take next positions on their basis----not giving proper weightage to Daily Momentum in the "heat of things" where Hourly Charts overshadowed other aspects.
In view of that , I have decided to post an Exl Chart indicating Closing prices along with 5HrEMA and 5DyEMA together so as to always see the Hourly closing vis-a vis Daily EMA and take position accordingly.
All of you should prepare this chart and follow it,particularly for carrying forward your trades to the next day



As one can very easily see,closing prices though occasionally breached 5Hrema never ever breached 5dayema to warrant any shorts carry-over to next day.

The above chart can be fine-tuned by an individual to take into consideration variuos permutations--

Raghu

Count Altered at Lower Degree:19.01.2011

Seen in Hourly chart:



As shown in the Chart above,this Y.c(ii) is capable of coming up to 5276.

As Y.c(i) = 5400-4639=761
61.8% retracement=5109
76.4% retracement=5220

Lets see how it pans out.

Raghu

EW , Trendlines and Momentum

I keep telling all my trader friends to never see EW in seclusion.
When a Corrective is capable of retracing 23.4% to 99.9% of Motive; and
an extended 3rd wave is capable of doing 162% to 425% of Ist wave,
THEN Momentum becomes the closest friend of the Trader to gauze the wave;
AND Trendlines,in words of my friend HD, are like toll-gates where the wave is most likely to stop(if not reverse)and move ahead after paying the toll.And to me,it is not only the lines joining H-H,L-L,or L-H that define a trendline but also the MAs.I use 9,20,50,100 & 200 DMAs though of-late I see some of my friends using 8,13,34 etc.

Now,as per my EW Counts,we have reached a very important point : A threshold




And how do we stand as per the parameters of Momentum and Trendlines?



Thus,not only the trendline joining the recent highs of 5400 & 5100 has been breached decisively( closing has been above it for four days now) but also on friday we have,for the first time closed above the 50 DMA as well.




A look at the popular Momentum indicaters on Daily Charts shows that:
1.Higher High & Higher low continues;
2.Daily close on Friday was above 8,13,34 DEMA;
3.MACD & RSI show no sign of let-up in up-momentum;
4.STS is the only indicater in Daily Chart that has shown a minor reversal;
5.Formation of doji candles for last three days with a very small daily trading range also is a give-way that up-momentum is losing steam;
6.The 9 day Bolinger Band has been acting as a barrier for last three days.
But no signs of reversal so far.

And what does the Hourly Charts say on same parameters?



And here the first signs of reversal can be seen.
But Hourly Charts can not be given more credence than the Daily Charts and the Indicaters here need confirmation from Daily Charts.

Conclusion:
Same as beginning.A threshold as per EW but no confirmation from Momentum & Trendlines as yet.So take your positions prudently. Personally I have initiated shorts with a SL at 4899.Targets,as per individual appetite, being 4805 onwards as we proceed.

Raghu

Nifty Higher Degree Counts: Difficult to go below 4300

May be I am being conservative.
But why rush?

Raghu