Understand cyclicality of Nifty Using KST indicator

KST (Know Sure Thing) indicator with the signal line is not sending across a very promising signal. See the below chart which was first published in the monthly update with lot more details and levels – The Financial Waves Monthly update.

Nifty Know Sure Thing (KST) indicator (shown in the monthly research report)

(Below research is the gist taken from August Monthly report)

Know Sure Thing (KST) indicator – To understand where we stand in terms of cyclicality of the market I am showing an indicator which is known to have worked extremely well – KST (Know Sure Thing). This indicator is developed by Martin Pring and it is nothing but a summation of various Rate of change indicator. Rate of change (ROC) is an indicator that measures the momentum of the market. Infact, momentum is the speed with which prices are moving higher or lower. If prices are moving higher but with slower pace it is not a healthy sign. ROC of different parameters measure different cyclicality of the market. By combining these different ROCs one indicator is taking care to reflect if the momentum is slowing across the different cycle period or not.

In the above chart, we are showing the KST (red line) with the signal line (blue) which is 9 days Moving average of KST of 10, 15, 20, 30 days ROC. To get better conviction and confirmation now look at the KST indicator. The top of early 2020 was captured using this indicator by us and the same is now again started to move lower below the signal line. It is a medium term indicator and does not signal the sell immediately but gives warning sign. KST has turned down earlier thereby giving a leading signal and negative divergences with prices. Now break below the support zone of 11,111 – 10880 will indicate that the next wave on downside atleast towards 10600 or lower has started. This will remain valid unless we see a close of the red line back above the blue on KST.

Get access to the daily and monthly research reports and see yourself on real-time as the pattern develops. Our bias might blindfold us to see things we want but an indicator like KST gives a clear signal without any controversy. See complete research here

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