Nifty Long Term Neo Wave Pattern with USDINR
Aug 22, 2023
Elliott wave or Neo wave is advanced part of Technical analysis that can help traders for short to long term forecasting.
Below research is picked up from monthly research report – The Financial Waves Monthly update
Figure 1: Nifty Monthly Chart:
As mentioned in the monthly research published on 14th August 2023 - Nifty in month of July 2023 made a low near 19234 and high at 19991. Since the low of 16828 not a single candle has closed below prior candle low on monthly basis. In August so far we are inching towards the prior monthly low and if prices closes by end of August below 19234 it will an indication that this wave on upside form 16828 is over and reversal for few weeks or months is starting.
RBI Policy - RBI maintained its status quo on 10th August 2023 keeping repo rates unchanged despite of inflation worry. Crude oil has reversed on upside from 115 days of Time cycle and continued rise in this energy commodity will put severe pressure on central bank to again start rising rates after a brief pause. This will not be a good sign but it is too soon to conclude rise in bond yields is sustainable or not. Nifty upside momentum can slow down from here or prices can reverse on downside retracing a portion of the entire rise we have seen from the lows of 17060. Below charts give much closer perspective on weekly and daily time frame and importantly keeping an eye on USDINR has become very important.
We turned super bullish when Nifty was breaking above 17060 levels and we are turning cautious now given the series of alignment seen across indicators and other asset classes.
Depreciation in INR – USDINR showed sharp rise over past few days and that sends an early warning sign for Equity markets. The breakout in this currency pair is seen after 9 months of consolidation. Detailed research is covered on INR in subsequent section but it is important to see the simple chart here to gauge rising pressure on bond yields, rising Crude prices and depreciating currency is not good over coming few months.
Figure 2: USDINR Daily chart breakout
Nifty IT sector
Nifty IT index showed sharp correction post Infosys guidance which resulted into short term down move. However, a few of the IT stocks like Wipro is forming classic inverted Head & Shoulder pattern on weekly time frame which is a bottoming pattern. As discussed in prior research as well Nifty IT index is moving in a range for exactly a year now and we are expecting positive breakout soon in this space. Prices are currently trading at 30400 levels and break above 31000 can start multi-month up move in this sector for targets of 37000 levels. Indian currency INR also can start depreciating against USD which can further support the rally in IT stocks.
Nifty Pharma Sector - We have been discussing about Nifty Pharma sector in earlier interviews and mentioned that this is going to be outperforming index for coming months. Pharma sector has been under correction for nearly 8 years after topping out in April 2015. This sector has now given a strong breakout and started to move up in form of wave 3. This index is currently trading near 15200 levels and can soon cross above 16000 mark as well. Any dips in pharma stocks can be used as an opportunity to buy as IT and Pharma space can be the flavour over coming weeks and months.
The above research is further aided with short term daily charts with clearly defined levels in monthly research thereby giving holistic view on Nifty, Bank Nifty, Stock for the month, Currency and Commodity outlook.
Advisory Independence Offer upto 60% – Subscribe to research reports and calls under Independence offer and get added to our premium telegram community along with offers of upto 60% off on standard pricing for annual subscription. Offer ends soon, act now – Here is Financial Freedom sale link
The above research is further aided with short term daily charts with clearly defined levels in monthly research thereby giving holistic view on Nifty, Bank Nifty, Stock for the month, Currency and Commodity outlook.
Advisory Independence Offer upto 60% – Subscribe to research reports and calls under Independence offer and get added to our premium telegram community along with offers of upto 60% off on standard pricing for annual subscription. Offer ends soon, act now – Here is Financial Freedom sale link
Master of Waves – Learn to trade using above methods of Elliott wave, Neo wave and combine with Time cycles to derive high reward low risk trades. Online session on 16th – 17th September 2023. Limited seats only. Know more