Market Analysis With Megh Mody

Triangle is always difficult to trade as prices continue to stay in a same range. However, in expanding triangle, the previous highs and the previous lows are taken out which makes traders confuse about the trend. As per wave theory, Prices are moving in an expanding triangle which have five waves in it (a-b-c-d-e). It seems that the last leg of the expanding triangle is over and the next leg on the downside will resume. Prices can test 265 levels or even lower in near term. In short, BHEL is expected to test the level of 265 or even lower in near term.

USDINR was moving in a range of 62.90-63.90 for several days. After breaking the level of 62.90, the pair tumbled till 61.38 levels which was marked on 23rd January 2015. The pair has retraced to 38.2% retracement of the previous up move and gave a bearish break in the rising channel formation. However, prices have formed an ending diagonal pattern at the end of the down move thus suggesting the likely termination of the down move. As per wave theory, the rally from 58.22 till 63.90 was a double corrective rally (a-b-c-x-a-b-c). After completing the double corrective pattern, prices then moved down in a simple corrective pattern (a-b-c). It seems that the pair will not see further downfall and it is likely it will reverse from here. The pair can test the level of 62.30-62.40 levels in near term. In short as far as the level of 61.30 is intact on downside, expect prices to move up till 62.30-62.40 levels in near term.

Bharti Airtel is a telecom stock and was in an uptrend from March 2014 till October 2014. The stock then started correcting especially after discontinuing the higher highs and higher low formation and started to form a lower high and a lower low formation which is a negative sign. Prices are moving precisely in a falling red channel and will continue to do so, till it breaches or equals or test its preceding pivot low placed at 335 levels. As per Wave theory, the up move from March 2014 was a corrective move (a-b-c) where in wave c the last leg i.e. wave v was truncated. Currently it is moving down in an impulsive wave (1-2-3-4-5). Recently it completed wave iv at 367 levels and have started its last leg of impulse wave v on downside. Prices can move down till 335-330 levels in near term which will terminate one impulse wave. In short, the bias is firmly negative for Bharti Airtel as it can test the level of 335-330 levels in near term. It is imperative that the level of 367 remai...

Nifty made life time high of 8627 levels in the month of December 2014 and thereafter it moved down till 7960 levels, thus eroding 7.73% from the highs. The index then gave a technical bounce and retraced 80% of the previous down move making a lower high at 8445 levels. Today the index snapped 6 day rally and thus gave a reversal bar at the top. A gap down move on the following day will open negative possibilities which can drag prices lower till its previous bottom. RSI has also bounced from the level of 30 and can now resume its down trend. According to wave theory, after marking a high of 8627 levels, prices came down in a corrective pattern and completed wave a, followed by 3 wave structure and completed wave b. Now there is one more leg on the downside which is wave c. According to the projection, wave c can move down till 61.8%n of wave a &b which comes to 8050 levels, breach of this level will then force prices to test the pivot low of 7960 levels. In short, Nifty is i...

From the daily chart, DAX is moving in a lower high and a lower low formation and precisely in a down ward sloping channel. This is a negative formation and can make this index slip down to lower levels. Momentum indicator RSI has also reversed from the level of 70 (overbought) and will now test the level of 30 over can even go lower. As per wave theory, the index is moving in an irregular flat pattern (a-b-c), is now moving in a last leg of this pattern which is wave c. Wave c is impulsive in nature and can also be corrective (ending diagonal). Wave c has 5 legs in it and currently it is moving in wave iii.  In an irregular flat pattern prices tend to test the end of wave a or can even go below it. The target of this pattern comes to 8400 levels. In short, German DAX is expected to test the level of 8400 levels in near term and the bias remains firmly negative.

Reliance Infra after making a top of 819 in the month of October 2014, started moving in a negative direction. The stock is moving by breaching its previous lows which opens negative possibilities. Prices made a pivot high in the month of November 2014 and resumed it downtrend by breaking the low of 542 levels, thus clearly indicating that the trend is firmly negative. Momentum indicator RSI has also relieved from the oversold zone and can probably resume its downtrend. As per Wave theory, Prices are moving in a corrective pattern (a-b-c), where it is currently moving in a wave c pattern which is impulsive in nature. In wave c it has completed wave 1,2 and 3 and it has probably completed wave 4 in the form of triangle. It can now start its last leg which is wave 5 on the downside dragging prices lower till 450 levels. In short, Reliance infra can move down to test the level of 450 as far as the level of 515 is protected on upside. Daily Chart of Reliance Infra

USDINR has been moving in a rising channel, forming a higher highs and higher lows which is a positive formation. Currently it is quoting near the support of the channel and can move up to test its previous highs. The momentum indicator RSI remains above the level of 50 which is a healthy sign. As far as the channel is intact the bias remains positive. As per wave theory, the entire up move from May 2014 till date is been corrective in nature. At present it has completed double corrective pattern (a-b-c-x-a-b-c). The probability is higher as the double corrective pattern can be converted to triple corrective pattern (a-b-c-x-a-b-c-x-a-b-c). If it does then the pair can move up till 62.00 levels or even higher till 62.15. However, if the channel is broken then it has completed double correction pattern and will start the next leg on downside which can test at least till 50% retracement of the previous up move from 58.20 to 62.00 levels which comes to 60.11 levels. In short, a...