Elliot's Impulse waves.(Part-5)
IMPULSE WAVES :- The Basics Waves that move the market in the direction of its main trend either up or down are called Impulse waves. 1....
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5010-5039 supply zone proved a ST resistance. 5002 proved a break down point. 4945 to 4982 proved a corrective rise, monitored with an ... -
Trading strategy that works wonders besides the supports & Resistance is " Retracement strategy ": The strategy that has wor... -
If the steady FIIs inflow reflects in the prices, 5405 should be protected going ahead and market may encounter minor corrections and keep m...
25 comments:
Dear Mr. Ilango,
One of best after market analysis with four charts today!
1. chart-2 is clearly indicating 5 wave impulsive up move from 4674. Then should we label correction from 5310 to 4675 as A (4760) – B (4930)- C (4675) corrective( Bullish Scenario) ?
2. Chart-4 is showing 1-2-3/Alt A-B-C for up move from 4675 till date. This is contradicting with chart-2 above for 5 waves. I think this three way up is labeled to align for corrective up move(If it proves) which could be labeled as A-B-C later if we move down from here. Is my understanding right?
If we move significantly down to retest 4800 first then it could be considered as A-B- C ? In this case we retest levels lower than 4674 to complete major C (Bearish scenario).
3. I think we are still at inflection point. Then what are the signals/indication we take in coming course to either consider current up move end at C (of major B) CORRECTIVE or 3 IMPULSIVE ?
Following this blog for a while, wished had done earlier. I am coming out of the slippery shores of "costly learnings" which RV9 has mentioned.
@RV9
Please guide. If we are reasonably certain that a range expansion could be of 100 to 150 points either way would it be an equally good alternate to place buy order above 5168 and sell order below say 5090. I am sure with your experience and expertise you would indeed have mulled over this, but still choose to go for long hedged strategy. your response will help us to learn for next time such range contraction happens.
@Rajvada
Option brokerage is not issue here, it is the ethos and the hedging strategy of RV9.
Brokerage can come as low as Rs 10 one side (not RK Global but others too). On a reasonable Rs 15 one side you pay under Rs 45 both buy sell with taxes and this is less than 0.9 point each trade.
SanDew
@Rajagopal
Your narration is poetry - keep it flowing.
And for yr penchant - may like to read this "Beware The Ides Of March" (Julius Ceaser) http://www.tradersnarrative.com/beware-the-ides-of-march-3822.html
Unable to post from office, do not know why?
March 18, 2010 8:23 PM
Hi, Rajvada:-
APPROX Brokerage calculation : RK GLOBAL
For 1 lot nifty CE @ 5400
Say BUY@RS 1, SELL @RS 6
FOR 16600 UNIT => 332 LOT
TOTAL PREMIUM BUY= 16600
TOTAL PREMIUM SELL = 99600
TOTAL TURNOVER BUY=5401*16600=896566,00
TOTAL TURNOVER BUY=5406*16600=897396,00
TOTAL BROKERAGE BUY+ SELL = 18 (9+9)
SERVICE TAX 10.36% (ON BUY+SELL BROKERAGE) =1.87 (1.8648)
A.+BROKERAGE = TOTAL BROKERAGE
TOTAL BROKERAGE WITH SERVICE TAX PER LOT = 19.87
FOR 16600 (332 LOT) =6596.84
==================
OTHER MUST TAXES:
STT 0.017% on the premium amount only On Premium Selling Turnover
=0.017% OF 99600 =16.93
NSE Charges 0.071% ON PREMIUM EACH SIDE:-
=0.071% OF (99600+16600=116200)=82.5
SERVICE TAX ON NSE(10.36%) = 8.55
TOTAL NSE charges =91.05
----------
OTHER CHARGES = 0.00225% ON TOTAL TURNOVER (EACH SIDE) = 0.00225% OF (896566,00+897396,00=1793962,00) = 4036.41
So total charges = 6596.84+16.93+91.05+4036.41=10741.23
PER LOT APPROX TOTAL CHARGE= Rs 32.35 per lot.
[IF U BUY 16600 UNIT 5400 PE @RS1 AND SELL @6]
TOTAL PROFIT=897396,00-896566=83000-10741.23=72,258
------------
Hope,
It will be helpful to you.
Thanks and Regards.
Respected Shri ilango,
I wish to learn from you
1. What is the CCI parameter you have used and what is Parameter of the Trigger Line in 'nifty day and cci indexed chart'.
2. For hourly chart sometime you opt for RSI 9 and sometime RSI 14. How do we go about selecting which one to use and when - rsi 14 or rsi 9.
3. On 5 minute chart what is the oscillator used and its parameter.
Thank You
SanDew
Dear Ilango sir,
Apart from regular TA ,O.I. interpretation may add to it or help bring further clarity to the analysis.My observations are-
1.last week somebody mentioned(I suppose it was “mynac”) during trade that 5200puts have added unusual open interest of about 10 lacs,.the day was start of week Monday,8/3,.the VWAP was approx.rs.125/-.it indicated that markets may not go down below 5080.The whole week was in the range of 5095-5168.
2.Sustained FII buying indicated break of range coming, that too on upside along with the strength above consistent high ema closing.(“volume preceeds price”,and if it is FII volume, it certainly does)
3.The range broke on Tuesday,16/3, from 5168,
Now-
• PUT SIDE
-5200 Puts have again being written rampantly,approx.19.5lacs,15,2lacs and 13lacs in last three days.the VWAP is approx. rs 28/- in last two days,indicating markets not going below 5170.
-5300 Puts have seen unusual writing yesterday(quite similar to that on 8/3),qty 18.2lacs,VWAP rs.70/-.indicating that Nifty should expire above 5230 next week.
-so, the above Puts cap the downside to 5170 and brought clarity of closing above 5230 as of now.
4.
• CALL SIDE
-5200 Call has seen decline in open interest since 10/3 ,with increase in price,indicating bullishness.
-5300 Call has seen steady increase in O.I.,with steady prices,since the start of the series,indicating writing at rises,VWAP may come around rs.15/to 18/-.It caps the upmove to 5320.
5.So we can interpret/guess that
-Any dip to 5170 or below(due to negative diversions) can be bought into.( closing above high ema)
- Markets are to close above min.5230,but the strength in Ema system both in daily and weekly can propel it to above 5300(,with help of short covering as stocks like Reliance still have shorts in the system.)
-Further proof of above 5300 closing will come from “No reduction/profit booking” in 5300 Puts with increase in Nifty prices, that will show that the Writers wants to have it all.
And 5300 Call unwinding .
-I don’t find any indication to short the Markets positionally.
• CAUTION
-The O.I. data is very dynamic and has to be constantly followed.It may be not updated on NSE website in realtime ,as today itself during trading ,calls were shown accumulating O.I.(as Viren had commented)but EOD u find just the opposite..
-This data is not sufficient to interpret movement but is only an indication of things to come or where the smart money is going.It changes very fast in realtime .
Dear aarvee9
Thanks for this deep insight in to the world of options.
rm
please let me know how many days is considered for CCI Index. In other words parameter for CCI Index calculation.
rv9
thanks a lot.
sri
i do not know the logic behind this question
"would it be an equally good alternate to place buy order above 5168 and sell order below say 5090"
why would anyone mull Buying High Selling Low ?
what is the logic ?
This question looks like waste of space.
Hello Aarvee9,
Good to see your posting on option operation.
Keep it up.
@ mok,
sorry dear cant speak my mind anymore ( ...tried to do so but advised to go to hell by beloved fellow member)
Keep Buying/Hedging options...
:-)
No Hard Feelings
Dear aarvee9,
Thanks for your detail posting.
Dear Aarvee,
Some very interesting number crunching you have done here ( point 3).
To help me understand it better, how did you get the VWAP figure mentioned and over what TF?
-----
You are right about the call OI disppearing ..from +10 to a shade negative..like they say gone in 60 secs.
@kp
Comeon kp dont "mok" me.
feel free to use the space .u were very correct in telling the absolute truth that options should be written off in a rangebound markets to gulp the premium due to time decay,
but i was specifically talking of a range break trading scenario ,to gain max. out of trade.pl. remember the time frame of the trade ,timing of trade(around 15th,16th of the month)and premium to acuire the call with time remaining in the series plus other indicators.
@ viren
thanks for ur comments.
usually i keep a record of these figures on the day i find them interesting or if i have to enter a trade.the VWAP figures were recorded at end of that day trading.only VWAP of 5300 calls taken as 15-18/- are estimated average since start of series giving weightage to max. o.i. addition trading range.
@rm,sri,jay,viren,mynac
thanks for the encouraging words
@kp
thnks for "mok"ing me.
still learning man------
Aarvee,
Your calculations are all very good and may be right, but I am a bit worried about the use of price in the form of VWAP to determine the range of the option and the prediction of option expiry based on it.
For me, it has always been the implied volatility of the option which gave me the range, the open interest was for the direction...
Anyways we will talk about it tomorrow...
@ viren,
very true
for me to o.i. and all these ranges are strictly indiators of some smart money movement ,i rely more on combination of other indicators to finally have a conviction to exeute trade.
this month IV in options is dead and then u find some interesting observations of put writings in such markets,then ------
@rv9
gr8 postings. keep it up for the good of all of us.
you got a company RV [rajveda] :)
@kp
rv9 is straight forward, puts forth his points on the table, but means well. He was explaining a particular context. Whereas the explanations demanded were for anywhere everywhere application. So I can understand since I was following the entire chat today.
@sri
why not put your file to viren to get an idea on the correlation ! will put more heads together,
@rajaG
goodness gracious, out of your short ... but wot do you do on that earlier 5060 ? I too got just one at 5100.
@arunima
thanks for the detailed costing.
@ilango
sir, fantastic. Now we will hav CCI divergence too.
you hav very many visiting professors now ... very interesting.
@rm, raja... mark sathish absent.
best regards.
Aarvee9,Viren,
Thanks for ur valuable inputs.It helps silent/EOD readers of the blog.Keep it up.
hi Navneet,
Tell me that u copied it from here,my post was at 9.15pm and yours now. just joking brother----
nice work,have added u to favourites.
hi..Rajib,
Different labeling are for few scenario possibility.
However, looking at bank Nifty having cleared its last high of 9265, it is a matter of time Nifty too will do so. And once a new high is done, the bullish scenario will become the choice.
Then, the negative divergence may result in a correction for this entire upmove from 4675 but may limit itself to 5150 or 5100.
hi..alphabet1,
CCI Index:Calculated by taking the average of "High, low, close of the day"-(X);
Take the 9 sma of "X";
Take the difference of the above=CCI index.
Why take diff. indicator set up.?
At times one particular time set up does not show clarity. In such a scenario, look at it from diff. time period.
Experience suggest that in a sideways market 9 period works well and in a trending market 14 period well.
5 min settings is Macd with 12,26 & 9sma.
@ aarvee,
Quite an indepth and detailed analysis with a clear & crisp summary for anyone to understand its implications for trading.
@ navneet,
You have covered the topic in a similar manner with some compelling charts. Very useful.
@ Mynac,
Your analysis has more company now. People will understand the implications of these "all important OI interpretations" for positional plays.
Prosenjit will be pleased with the developments..
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