Sunday, February 13, 2011

EW Analysis

The Elliot Wave Analysis is an effective Light house for me to keep my Trading Boat steady . It gives us probabilities by counting the waves and following the hard EW rules to see the coming weather (Trend). 

Note: I have edited this Post for the Alternate count subhead .The alternate count mentioned had been invalidated on trading below 5400 level . Please check the Post again.Thanks

In Preferred count that I am following is that we are trading in (iv) minuette of the iii Minute of the 3rd Minor now.

Probability # 1 

If the above count is right than the wave (iv) should not cross the wave (i) region at 5418 level ,as per EW hard rule. This means that it can cross the 'Blue channel' marked in the chart and will come down again in the channel for a (v) ,which can retest the lows or form a new low and effectively complete the iii wave.
The ratio count of wave (iii), from 5556- 5177 ,shows resistance at Fibo level of 5367 and 5410 .

The Market dynamics may oblige this wave count by trading in a range this week below 5420 level and then going down further next week which is the Feb. series settlement week due to 'buy on dips' and long build up liquidation scenario.

The Point of Invalidation remains the 5418 level to keep this count right.

Probability # 2

If the Market starts trading above 5420 level , than effectively the Minute wave iii has ended at 5177 level and we will trade in the iv - 3. This will cap the upper range at 5690 level which is the region of wave i . The Fibo chart shows various resistance level which also has the 200dma level in between.

This will mean a effective cross of the 'Red' trendline in the second chart for the iv th wave , trading below 5690 and another fall for the v th Minute wave to a new lows .This will keep the markets range bound till mid March or more before a further fall . 

Alternate Count:

Remember the Game Changer level remains 5690 as per the EW count , violating this level will mean the invalidation of the Minor wave 1 also, which will change the Medium term out look too.This will bring us back to the drawing table to search for the Alternate count . 'Pending 5th scenario' since 4675 and this correction being treated as a-b-c correction of the 4th, has been invalidated on breakdown below 5400,the region of wave 1.
see the EW chart in the Weekend post of 23/01/11 -

Read the reference Post for Game Changer Levels - Key To Trade The Market-


mynac said...

Very effective & useful analysis.It is very much useful for those like me who can not count waves but try to understand it.
Now considering & with the help of your analysis my understanding will be as follows:
From Monday onwards
1)if NF O.I.will start to decrease & if nifty shall cross & close above Hema & if there will be writing evidence in 5200 & 5300 PE's then probability = "the Minute wave iii has ended at 5177 level and we will trade in the iv - 3."
2)if there will be not much deletion in NF O.I.& in spite of up move( if there shall be any then) & writing evidence in 5200 PE,then probability 1# should be there.

I am favoring your probability No.1# than 2# because considering the down trend,huge NF O.I.(2.61 CR)it will be not so easy task for Bulls to force Bears to cover their shorts but Market is supreme always so let us see.

Anonymous said...

good analysis.please keep it up.keep guiding.

AAR VEE said...

Dear mynac,

Nice of u to co-relate the EW analysis with the Options analysis and Futires O.I. u know they show the probable movement of the smart money if read correctly.

One must remember these are probabilities only so if trading precautions as s/l and money management are followed ,can give good results.

Last thing is to believe the prices unfolding on screen in corelation with the larger TF.

Thanks buddy for visiting and share ur views too.

desikan said...

i am visiting the blog for the first time. Really wonderful analysis. I am on the learning stage for Elliot waves and this blog is very useful.

I also feel your probability-1 has more chances to succeed considering how powerful the bears have been in the last one month.

Thanks Aarvee.

AAR VEE said...

Hi desikan,

Thanks for visiting the blog,u r welcome to share ur views.

I use EW for guidance to the bias i am following.Like to analyze the corealtions of different technical aspects and then trade the direction and levels i get.

Fire said...


Mindblowing analysis as expected. Now a greedy mind is never sated. :D

So, my unabashed request is --- could we get a P&F view too? Please don't throw shoes now... :)

AAR VEE said...

Hi Fire,

Thanks for the comment and request but I am still to venture in this aspect so unable to do the needful.Though i like the method as it cuts out noise and is accurate.

may i suggest that u view the blog of one of our friend ,dear Rajib -

(The link is also at 'my trading diary').He is doing a wonderful job on this method and i find his analysis quite proficient.

KRG said...

Hi AAR VEE: Very Nice graphics.. One possibility is that we have done a terminal from 6180 levels (series of five threes). Crossing the blue channel (in the second chart above) is the first requirement for this.. Point of invalidation would be for the prices to get back to below the blue channel

AAR VEE said...

Sure KRG ,this can also be a probability.Thanks

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