ValuePickr Forum

Elliot Wave Difficulty/Identifying Waves

I have started learning elliott wave theory since last month and finding it quite useful in current times…here is youtube link of a face interview of Mr Rohit Sharma of Indiacharts…https://www.youtube.com/watch?v=1JNGEZ_BGPY

As brought out above by Abhishek Ji, few falls and intermittent rallies are quite likely and a 50-60 percent fall is quite probable when we look at the complete thing as conclusion of 26 year old bull run since 1994 as a Super cycle as Elliott Wave theory…time scale wise also such levels may take complete 2020 or even 2021 to reach as second order effects will take time to unfold…

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EW the real issue is if you get the wave wrong you are finished. One cannot take position based on EW. It takes years of charting to identify the correct wave ( 1-5). If you need more stuff, visit this site Elliot wave lives on . Tony is no more there . I have interacted with him few times very good human. He was instrumental in I inventing Trend following system. Now it is run by his daughter Christiene. EW is widely known now, biggies know that and there is no edge now. Biggies will confuse you to that extent you will not get the correct wave. May be it helps when you are selective.

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I wouldn’t say Elliot wave has lost its edge in India. I’ve seen a few forums, nobody knows Elliot waves. Now due to Rohit shrivastava some people are beginning to notice.

If there are some biggies that know and follow it, then they play with big numbers. You can still make a trade since their trades won’t change the market as retailers haven’t gotten into it.

A better gauge to know how many follow elliot waves would be to see twitter followers of Rohit Shrivastava (~15k) or Anant Acharya (~8K) and comparing it to IT Jegan (~51K).

As to your earlier assertion that a wrong call can finish you, there is stop loss indicated in EW analysis plus you can take the trade only when the trend changes and crosses your requisite point (start of earlier wave or .236 fib).

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please refer the wave marking above…as per Mr Ramki N Ramakrishnan, the final correction wave at the end of a super cycle tend to be longest than previous correction waves i.e wave 2 and 4…the wave 2 from top of 2000 till lows of 2001 lasted for 19 months…so bottoming out may take this much time or even more…causes may be other than Corona virus…one needs to be very cautious while deploying cash…

I am a TA and have been seeing charts for the last 20 yrs. IMHO market structure is so complex that one cannot capture its move by waves , patterns ,etc and it is more to do with the confidence of people participating in that at any point of time rather than any macro/micro/fundamental factors. Ultimately it boils down strength of the business or the economy to withstand the shocks. Equity value can never become zero as it depends on the underlying business which grows based on demand which itself cannot become zero in good businesses. One can use a method like EW,etc to capitalise on the moves and it stops there.

He is predicting 5100 for Nifty do you think it is possible. One thing I don’t like and which does not help is the prediction business. If you want to make money fundamentally or technically , just follow the markets. This will help in preservation capital and multiplying it also. Simple trendlines will tell you the trend and one does not need a EW for that. Pl see his chart and latest counts you will understand what I am saying.

All TA is prediction about future price based on current price movements and repetitive behaviours. Including whatever TA system you follow. You may predict for the next hour, he may predict for next decade.

From my experience its easier to predict for next decade than next hour … its based on one’s mentality.

As for Nifty @ 5100 … i am ~predicting~ betting on 4200-4400 just based on PE & EPS contraction, 5100 would be quite optimistic.

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Dear Sir,with my limited experience i feel that accuracy of prediction of Nifty hitting 5100 is not important…what is more important is that it is one of the probabilities and we should be cautious of that…my equity advisors who are predominanly into fundamental analysis are also expecting levels of 6000…so when we arrive at similar conclusions from different methods, its probability increases…

Also even if one can get a forecast with 25 percent error on +/- side, one can still reap great benefits from it in terms of capital allocation and risk management…

I am speaking of all these aspects from techni funda perspective…

Regards

You are completely wrong. Charts/TA shows the path of least resistance. If somebody assumes that it is for future prediction it is wrong. More sin is committed if somebody is using it for targets. That is my view and I end with this.

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ELLIOT WAVES is a fascinating subject but difficult to master and prone to a lot of interpretation errors. Hence it is useless to try to be too precise Even if we get a rough idea about the direction of the markets in the short/medium/long term, it serves a big purpose.

I can keep shooting targets related to possible downmoves and make those statements more exciting by providing numbers that can scare the daylights out of people :grinning: but that will not serve any purpose.

As most guys who know basics about EW know, corrections take the form of A-B-C pattern. We seem to have seen the violent A wave down and the most destructive wave 3 within it seems to have completed at 7500. Since wave 3 was extended, wave 5 should in all likelihood be normal. Currently as shown in attached daily chart with labelling, we seem to be somewhere in wave 4 which looks like taking a form of small a-b-c. a seems to have finished at 9000 and now it seems to be b down post which there can be c up to complete wave 4 to be followed by wave 5 down. That will complete “A”. And post that there can be a rally in “B” which can have different possibilities of flat or zigzag or any other possibilities mentioned in corrections. But it seems “B” could be a tradeable rally whenever it starts.

On where the whole correction ends is anybody’s guess. But if we look at charts post 2008 correction, the region of 6300 (plus or minus 100 points) seems to have provided strong resistance three times before it got taken out and subsequently we had a strong rally. According to principle of change of polarity, I would be keenly watching that region to see possible change in sentiments and ending of correction. But this is only a working hypothesis for me and I will take things as they come. Rather than exact wave count, the market mood often provides better clues to spotting change in sentiments.

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On the dot hiteshbhai. I could not express myself like you though I meant it is for broad direction. Pl see the attached chart. I will wait for a system Trigger for a possible low. But confirmation of that low and a new uptrend is given when Nifty shows strength above HTL ( Resistance) which I have not covered now. Because, I felt it is too early to talk about that.

This is qtrly . Both the above charts are important now.

With the index taking out the previous swing high of 9039 today , the wave count of a-b-c in the 4 th wave down assumes a higher significance. Index can still attempt slightly higher levels of 9300 (less likely) or close to it but if the labelling of a-b-c in wave 4 of larger A is correct, we might be staring at a final wave 5 down of A to finish wave A. Whether the above labelling is correct and where the wave 5 ends needs to be seen.

Today and tomorrow remain important days to figure out whether the above wave count is correct or not.

In all this up and down moves,some stocks have started showing good relative strength and may be worth keeping an eye on . Pharma as a basket seems good to look at, and within it, some stocks like torrent pharma, divis, dr reddys, cadila, ajanta, etc look better choices simply because most of them have been trading above their 200 dema since a long time. The other basket to look at could be speciality chemicals pack. With stocks like navin fluorine, deepak nitrite, basf etc. BASF seems to be making an attempt to come out of a bear market.

The purpose of this post is to keep a continiung watch on the earlier posted chart depicting elliot wave count of the downmove that has started since last month. And is for learning purposes only. As mentioned before, I remain on the sidelines in a wait and watch mode.

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Ya Hiteshbhai. 8640 is important for tom . Any loss of support here can lead to 8200 and may be a new low. If 8640 is held we can see 8900 and 8300 as you said. But I am biased towards downside . As you said tom is important. Pl see the chart attached. I also feel profit booking can happen in Pharma.

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Very interesting to know the EW view now when Nifty has closed above 4a. what are the probable answers.
1.4b is completed and now 4c how far it can go.
2.when we can come to know completion of c ???( Is it when low of b is taken out or a fibo%)

Given the complexity of markets, how one can have a target and how one can capture the complexity by a simple mathematical formula (fibo).This is what I said earlier the count becomes a recount.

Whereas Trend following system (pl see the chart above) says Nifty having closed above 8978 , Trend has turned positive on day t/f and as far as the low of the day 8905 holds trend is UP. Any dip till 8905 can be bought and with every up move 8905 moves up. The momentum comes above 9400 ( HTL) as it shows the day trend. One can trail or exit. If 8905 is lost, downtrend starts which may result in the testing of 7511. Please note that I am only presenting the difficulties with EW with my limited knowledge and in no way undermine it.

Personally, i am following a different wave count where Wave A of this complete correction has got completed at 7500 levels…now we are in wave B which will also be a corrective wave ABC…Inside this Wave B, subwave (A) has got completed and Subwave (B) is either complete or under progress…please refer images below which show the two possibilities…if Subwave B is still under progress, it may take a shape of an expanded flat or triangle as shown in second image…

!


Target for Wave B is 10400 as that will be 61.8 percent retracement…so as of now its unlikely that nifty will break the levels of 7800 (it may touch 7800 if it emerges as an expanded flat)…on the upside various Fib levels for retracement need to be seen…Nifty falling back from 38 percent or 50 percent will also reflect severity of strength of bears…else 61.8 retrace near 10400 looks possible…

Most probably, we are in subwave iii of wave © of Wave B as shown in image below… so we should be hitting 9700 before getting a pull back…but this will become invalid if we find that Subwave B is still under progress as a triangle or flat as shown in 2nd image

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I have not ventured into trading but as heard from few that Elliott wave traders use many other indicators also for confirmation of such signals…

But i feel that Marking these waves on a chart certainly give a good clue about the future trend in medium and long term…in short term, certainly it becomes much more difficult…

At the outset, I am making it very clear that I am not demeaning EW. I gave up EW because of the difficulties involved. Hats off to somebody who can comprehend the wave structure as listed above by you and take a view of the market direction. Pl note there is a difference to what you have counted and what Hiteshbhai has done. EW may appear exotic but does not serve the purpose one wants. After lot of efforts, I came to the conclusion that Trend following is the best because of the complex nature of markets - meaning dependent on so many things macro,micro,economics,fundamentals,interest rates,FX,etc which I cannot comprehend and framed my own system for tracking markets for investment and trading.

Pl study the chart attached. One gets the same result when you apply to the current downtrend. A bottom ( Support) is established only when a related resistance is taken out . Untill it is anybody’s guess.

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Elliott wave is like smoke - you can see it, you can analyse after the event, but you cannot catch it.

  • Thomas Demarke

Updated nifty daily elliot wave chart with possible wave counts. Looks like 4 a-b-c is clearly visible and c might be maturing. If yes then we might be looking at beginning of a wave 5 down of wave A.

nifty daily

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With today’s weakness with nifty cracking below 9000, it seems wave 4 has finished near upper end of triangle drawn above. (which also is in shape of a bearish rising wedge) and a wave 5 probably has begun. Since wave 3 appears extended, wave 5 is likely to be normal and we need to see how low it goes. Usually it tends to break the bottom of wave 3 but ocassionally there can be failure and it can terminate above the previous bottom. But in any case, if downswing has begun, one needs to watch out where wave 5 finishes because post that, there can be a strong wave up in form of B.

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