Apr 232014

In this post, I am going to present you with Elliott Wave analysis of Wockhardt Ltd. One of the members of my exclusive club had approached me for a consultation back in January 2014. It was the 14th of January, to be precise, and the stock was trading at Rs 413.65. The member sent me the following brief note:

“I consider myself as long term investor. I hope your advice/analysis will help in some of my long term investment decisions. By long term I mean I could hold for more than a year, if required.

Could you please look into the following stock for me: (I understand this will cost me 2 credits)
Market – India – NSE
Company – Wockhardt limited
Exposure – None at this time.

Comment: This stock has comedown from around Rs. 2000 and currently trading at 420. It saw a low of 350 about 3 weeks back. Did it start its uptrend? Since the company is in pharma industry, it is subjected to lot of FDA regulations. I think FDA’s adverse observations made the stock to drop in recent times.”

I looked at the chart, and could make out that it was going to be a challenge to come up with a sound analysis. I prepared a set of 10 charts and will share with you some of them here. Please note that this is not a marketing message. The idea is to allow readers to see the value of Elliott Wave analysis, and how someone with experience with Elliott Waves could come up with a sound strategy. I recommend that you open the charts in different tabs.

Wockhardt Big Picture

Wockhardt Big Picture Elliott Waves

Wockhardt First Target for C wave

Wockhardt First Target for C wave

3rd wave target within the C wave

3rd wave target within the C wave

Verifying 4th wave as correct

Verifying 4th wave as correct

Identifying possible end of wave 5

Identifying possible end of wave 5

Analyzing minor waves of wave 5

Analyzing minor waves of wave 5

As can be seen from the above, I have finally come to the conclusion that a major correction is now over, and the rally that started off from that low is the first wave of a new cycle. Now comes the more interesting part, the one about where to buy.

Have we finished 5 waves of wave 1?

Have we finished 5 waves of wave 1?


So we have identified a low-risk entry point. However, there were other considerations like risk-management and what size to expose. Yet, an initial entry point has been identified.

This member went long a decent position size at an average rate of 430. He probably purchased some on the way up after the dip, a smart investor I must say. He understood the size of the upcoming recovery, and wasn’t penny wise when it was the right time to take a risk. A majority of traders do the opposite. They take big risks when they should be cautious, and take small risks when everything points to a favorable move! Anyway, this is what happened. I am sharing with you just the plain chart without any notations. We got a dip down to below the 400 mark twice in the days that followed and the stock is up by nearly 70%.

The power of Elliott Waves

The power of Elliott Waves

Oct 232013

Trading NIFTY using Elliott Waves by Ramki of Wavetimes.com

In my last Elliott wave update on the Nifty Index (posted on 3 July 2013), I had presented you with a big picture scenario. The third chart in that post had one level as 5112 being 61.8% of wave A. It is gratifying to note that on 28 August, the index reached within 6 points of that level (5119) before it commenced another move higher. To those who don’t understand markets, 5119 will appear far away from the 4300 level which was written in my notes at the bottom of that chart. These people will have serious difficulty in making any money if they pursue technical trading. There are a couple of things that one needs to understand about Elliott waves. A big picture outlook is just that. It gives us a broad road map. Timing an entry to capture the next large move will demand paying careful attention to waves in the shorter cycles. In today’s post, I am presenting you with an example. This is a 10-minute chart! You can see that I have put some tentative Elliott wave labels on it. These are still work-in-progress, and are by no means conclusive.

In my book “Five Waves To Financial Freedom” I have explained in detail what happens when a five-wave move is completed. The main challenge lies in determining whether the move is actually finished. There are many ways of counting a move, and what you see here is one example. A short-term trader could have benefited by counting it like above, and by selling at 6220 with a very tight stop. I have often stated that trading the markets requires a little more than an ability to count waves. This is where many of us suffer from weakness. We choose to believe that what we are able to ‘see’ is how the markets will behave. If there is one important lesson you need to master before you expose real money it is the willingness to accept you could be wrong, and knowing beforehand what you will do when you are proved wrong. You need to evaluate various scenarios, and determine which gives you the best risk-reward trade off. Then, you need to be patient for the markets to come to your desired level. And if it does come there, you need the courage to actually pull the trigger!! And finally, you need to be diligent to monitor the position to take corrective action if the market sends out fresh clues that are counter to your thinking. It is precisely because of these challenges that you need to be wary of trade ideas that come at you thick and fast from various sources, including TV channels. It is so easy to say ‘buy here with a stop there’ and not bother with that recommendation beyond that date. After all, there are new recommendations for you to look at the next day!! Anyway, I wish you good luck with your trading. This blog aims to teach you the methods, and nothing more.

Ramki of WaveTimes.com

Oct 092013

Elliott Wave analysis is one of the most versatile tools in the hands of a trader, provided he/she knows how to use it correctly. At WaveTimes you have the opportunity to learn more about the Elliott Waves.

Old timers know that my favorite formation is where we see an extended fifth wave. In fact, it has been a recurrent theme in WaveTimes that extended fifth waves can make you rich. You can do a search for that in the web and see the various examples given in this blog. I believe the concept has also been well covered in the book “Five Waves to Financial Freedom”. In today’s post, we will look at a popular index in the Indian markets known as Bank Nifty Index.And you guessed right, we will see another example of an extended fifth wave and what happened next. And importantly,these concepts will work in ANY well traded market, and even if you don’t have any interest in India’s BankNifty Index, I suggest you spend a few minutes to read and understand the Elliott Wave ideas enumerated below.

The way to start counting your waves is from a significant top or low. Let us start with the important top around 13,430 that was posted on May 20, 2013. I suggest that you right click each image and open it in a new tab.

Bank Nifty Index Wave 2

As you can see, the first sell off is labeled as wave 1 and we got a 50% correction of that as wave 2. The next wave down was the third wave, and this was followed by a ‘Flat’ correction as the fourth wave. This fourth wave was 38.2% of the third wave as shown in the Elliott Wave chart below.

Bank Nifty Index Wave 4

After the fourth wave was completed, the markets set off earnestly to the South and we got an extended fifth wave. As you know, a wave is known as an extended wave when its proportion is unusually long in relation to its counterparts in the cycle.

Computing Extended fifth wave in Bank Nifty Index

The extended fifth wave shown above has traveled 138.2% of the distance seen from the start of the first wave till the end of the third wave, i.e. from points 0 to 3.But what happened afterwards is most instructive. True to its form, once the extended fifth wave completed its own minor fifth wave, we got a massive bout of short covering, and the market raced back to the level of wave ii within the extended fifth wave. This is what I have taught you many times in this blog and in my book. Imagine how much you could have made by buying near the end of the extended fifth wave!

My next Elliott Wave chart shows how the rally evolved from the lows. The chart below shows that we got a second wave that came down by 70.7% of the first wave. As you probably remember, there is something known as ‘alternation’ in Elliott Waves. If wave 2 was a simple correction, we should expect wave 4 to be complex. Likewise, if wave 2 was a deep correction (as is the case here) we should anticipate the 4th wave to be shallow. These are all illustrated here for your benefit.

Wave 2 in Bank Nifty uptrend

And finally, could one have anticipated where the fifth wave will finish for teh rally from the bottom? Of course, yes! Remember what you read in “Five Waves to Financial Freedom”? We compute the target for the fifth waves by measuring the distance from 0 to 3 and then calculating some ratios. In the present case, the fifth wave finished exactly at the 61.8% measure of the that move. See the next chart for this.

Wave 5 in Bank Nifty uptrend

Well folks, that brings us to the end of this post. What you need to know is that it is possible to anticipate the terminal points of moves, and while there are no guarantees that it will work, you will have a chance of taking a low-risk trade at those points. Trading is all about taking sensible risks. This is what we should all be doing. I realize many of you still have difficulty in counting waves, but that is a challenge you will overcome with practice. Good luck.

Jul 032013

Hello Traders from India. I know you have all been patiently waiting for some indication about your famous NIFTY index. This post will attempt to give you an idea of my current thinking. As you all know, I am not offering any trading advice on this blog. Members of the exclusive club get to see how I would actually trade using Elliott Waves. However, there is enough material here for you to do your own thinking. Good luck!

Oct 242012

Over the last four years or so, this blog has been presenting you with Elliott Wave Analysis of various instruments in a variety of markets. I have shared with you veritably a treasure trove of information, and have spent countless hours answering innumerable questions from young and experienced traders alike. All this went on despite having the responsibility of running the treasury of a bank. Whether I was at an airport waiting to board a flight, or by the seaside with my kids, I cared enough to give you freely of my time. So it was a great pleasure to see the spontaneous response from readers when I finally launched a paid service where I will share my trade ideas. Thank you very much. Some of you might be disappointed because I have pitched the price relatively high. I did that for a reason. I really wish to keep the number of members there manageable. Secondly, that service is meant for traders who are willing to be patient for the right kind of set ups. There is a bunch of people out there dishing out trading advice every day, and sometimes several times a day for much less. I don’t belong there, neither do members of our exclusive club. Having said all this, I wish to reassure you that this blog will continue to stay alive, because I have promised you that this is a ‘living book’ – an extension of “Five Waves to Financial Freedom”. However, you won’t find as many updates as before because of increasing demands at work and elsewhere for my time.

For many weeks now there have been numerous requests for Elliott Wave Analysis of India’s stock indices. Following the recent flash crash on the Nifty, that chart is screwed up. The exchange has refused to fix the price, even though the trades were cancelled. So I am turning my attention to the Sensex index. There are some interesting things to be noted in the following six charts. I would urge you to study each one of them carefully and see if you can follow how I think about these patterns. I don’t exclude anything. I approach the markets with an open mind, always aware that I could be wrong. I start off with an idea, a hypothesis. I look for additional clues that validate the hypothesis, and then decide where to get into the market. In this blog, I have repeatedly said that I am not offering any trading advice. You come here only to learn. Yet, the hypotheses are there, and if you were alert enough, you could have taken numerous low-risk trades that turned out to be extremely profitable. True, some ideas turned out to be wrong. But that risk is always there. A sound knowledge of Elliott Waves would allow you to choose very low risk entry points and this is why so many of you are attracted to learn it. Enough! Time to look at the charts. As always, there is more on the chart than here. Enjoy and share with others. Ramki.