Many followers asked me to post Elliott Wave analysis of any stock as I post analysis of Nifty only. I analyze stocks also for my personal trading but post reports only of Nifty because I prepare detailed reports for the aim of training/teaching to my subscribers as Nifty gives good moves and form different patterns frequently which is good for my students to learn faster. And I post same reports on my website. Analysis doesn’t take much time but plotting on charts, writing detailed explanation of 500 plus words and publishing on website take couple of hours and it is impossible for me to prepare more than one report a day.
Today I am posting the Elliott Wave analysis of Axis Bank that I am following and using for personal trading from some time. Before showing the current scenario let me start with old analyzed charts:
This is hourly time bar chart of Axis bank analyzed on 09 Aug 2014 when I identified wave 5 already extended till 90% and progressing as Ending Diagonal. I decided to sell this script after break below the lower line of ED with recent high as stop loss because I was expecting 100% retracement of extended wave 5 sharply. Details of waves are given on next chart.
This is also hourly time bar chart of Nifty analyzed on 01 Oct 2014, I explained this chart in my book “Practical application of Elliott’s Wave Principles by Deepak Kumar” and is also on cover of this eBook. Axis bank declined sharply after breaking below lower line of ED and first leg of fall corrected full extended wave 5 as I expected. After bouncing for wave B, wave C corrected almost 98% of full 5 waves move. Axis bank decline almost 54 points from top but I book my shorts in 31 points profit only.
Again, on 10 Oct I found low risk buying opportunity when Axis Bank bounced from 371 to 393 and declined again below 61% retracement. I again bought with low (370.90) as stoploss assuming the correction from top as big wave 2 and expected sharp move for next bigger wave 3. I bought because there was only 4 points stoploss but possibility of profit was relatively very high as next big wave 3 must go above high again.
That was the old story and let me show you present scenario on Chart:
This is again hourly time bar chart of Nifty showing combined move after previous charts. As I assumed the completion of bigger wave 1 at 424 and bigger wave 2 (abc) at 371. And I bought at 375 again expecting a faster, bigger and steeper wave 3 that has to go more than 100% of wave 1.
Axis bank bounced sharply as I expected and rising continuously after that. I took risk of just 4 points and already holding 70 points profit till now. But, I am not booking profit yet and just trailing stoploss as I mentioned in chapter “Personality of wave 3” of my book that “You should not book profit in wave 3 as you may not identify how higher wave 3 can go”. Wave 3 projected just 138% till now and not entered in extended zone yet. I am not booking profit but just trailing stoploss on my holding.
Let me show you closely how wave 3 is progressing:
This is again hourly time bar chart of Axis bank showing move of big wave 3 of previous chart.
When I see at this chart closely, it seems that just inner wave (3) of bigger 3 is in progress and inner wave (4) and (5) of bigger 3 followed by bigger 4 and bigger 5 is still pending. I will hold my full position till the end of bigger wave 3 or till my trailing stoploss hits. Will cover my 50% at end of big wave 3 and will hold rest 50% for bigger wave 5.
Now, I think it is enough for you to conclude the near future of Axis Bank.
How I apply applying Elliott Wave Principles in Trading?
I post analysis report of Nifty only just because majority of trading community follows it and it shows good move and forms patterns frequently which is best to teach the concept of EWT to my student on live charts. I analyze Nifty doesn’t means I trade in Nifty daily; I analyze Nifty just to show the formation and identification of patterns to my readers on live charts. I just explore the probabilities in my reports of Nifty but whenever I find any good opportunity I mention that in my reports and I also trade that. Nifty often gives 1 or 2 good opportunities to trade in a week.
There are many misleading concepts and misunderstandings about Elliott Wave Theory in market but I find it as one of the best tool to predict market. EWT is not a tool for daily trade and no single scripts gives opportunity daily. EWT is meant to find hidden Gems.
I always search and track the stock where I identify the progress of wave 1 and 2 and always look for the entry at wave 3. It has three tremendous benefits:
- Risk is very less as there is no confusion about stoploss (As wave 2 can never go below wave 1). When I see wave 2 already corrected 61% of wave 1, it is a perfect entry with minimum risk for high reward. Even if I am wrong in identifying and my stoploss hits, the loss is very minimal.
- Reward for risk is really high as wave 3 is always more than 100% of wave 1 and most of the time it goes 161% to 461% of wave 1. Sometimes we get more than 1:10 risk reward.
- The most important thing is that there is no prolonged blockage of Money. As I take entry at wave 3 which is always faster and steeper. I just take the quick profit after end of wave 3 and search for other opportunity to invest again. Just see the steepness and speed of every wave 3, (3) or (iii) in above charts.
So, EWT is not a support and resistance calculator to trade daily or any other chart pattern or indicator where you need to wait for breakout or diversion for confirmation. It is about the identification of pattern that every financial instrument follows, and need to identify in which wave the stock is at. Once you identified the waves, you will feel the further roadmap of that script and you can execute trade when you see low risk opportunity. And there is no need to apply any other Technical Indicator and no need to follow any news, waves will show you everything.
Yes, you might failed in identifying waves many times (no one can be 100% correct), but if you trade with discipline even 3 out of 10 successful trade will result in overall profit. Elliott Wave Theory is one of the best analysing method but only if you know how to apply it.