NIFTY : Trend analysis with combination of leading and lagging indicators

The early trend identification is pivotal to set-up trade/investment. As there is a saying 'Early Bird always gets the Fish'. There are various leading and lagging indicators to identify the trends. This article combines both leading and lagging indicators to analyse CNX NIFTY with an intent to provide educational idea for investors/traders. 

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NIFTY Weekly Chart

NIFTY on the weekly chart has formed an expanding triangle indicating the expansion of trading range. The index has touched the top end of the expanding channel perfectly and has started its next major move.

NIFTY Elliot wave Daily chart

NIFTY has perfectly move as per Elliot wave theory and Fibonacci time series as it touched the upper band of the expanding triangle completed its 5th impulse wave to 6342.95. Then started its corrective move and corrected for 8 trading sessions. Further moved contra trend for 3 trading sessions retracing exactly 61.8% corrective wave (a) as wave (b) till 6203 faster than wave (a) indicating clear short covering move. The fibonacci time series along with the move of wave (a) and (b) retraced perfectly.

Scenario 1: Now the corrective (C) wave has started which can correct up to 5 _ _ _. If considered the principal of equality. 

Scenario 2: If the wave (C) retraces 1.382% of wave (a) then Index would move to _ _ _ _.

Scenario 3: If wave (C) has to retrace wave (a) 1.618 times then the move would be up to _ _ _ _.

Now we combine simple trendlines, candlestick patterns, DOW concepts, price patterns and technical indicators to sync with complex elliot to identify the reversal. CNX NIFTY has formed a Tweezer bottom @ 5972 which becomes a vital support for immediate near term. 

NIFTY Daily Chart

After touch the upper end of the expanding triangle on weekly charts @ 6342.95, NIFTY has formed a gap  down from 6311 & 6304 on daily charts and closing near the low point of the day around 6253 (5/11/13) indicating a first bearish sign for coming days and then fell down to 5972 which is the significant support area 5970 - 5980. 

The classical short covering bounce occurred later for 3 trading sessions testing 6200 odd levels retracing 61.8% fall from 6342 - 5972 as shown in the Daily chart above. Then the index formed an evening star candlestick pattern confirming the lower top and moved down to 5972.80 precisely held the support area. 

Now, If NIFTY holds 5972 would enter into a trading range of 5972 - 6122. Below 5972, a descending triangle formation will confirm and the pattern targets would sync exactly with Scenario 3 as discussed above. The upside reversal triggers becomes > 6150 on closing basis.

The Scenario 1 targets almost sync with 200 EMA, which is 5_ _ _ . A negative divergence in RSI was a day earlier than MACD. When the prices gaped down on daily charts and closed near days low indicated bearishness and signs of trend reversal as shown in daily charts and discussed above.

Resistance :   6050/ 6094/ 6125/ 6210
Support     :   5972/ 5_ _ _/ 5 _ _ _/ 5 _ _ _

Some counts have been intentionally omitted from this research article. Our paid subscribers have received the reports in the early stages of the trend reversal. 

Thus, we conclude with the utilization & application of combination of leading and lagging indicators along with the price action, the appropriateness in predicting the trend reversal can be significantly improved for short, medium and long term. 

Raju V Angadi

Equity Research Analyst

 To know more about probable counts analysis on NIFTY, BANK NIFTY and CNX IT along with 5 stocks for the month check out our newsletters and advisory services contact us back on rvangadi@googlemail.com (OR) swing research5@gmail.com (OR) +91 78291 55900

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So considering all the scenarios in case and to be one of those in the direction of the next major trend.         

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Disclaimer: This is just an view based on the research of individual for educational purpose. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in markets