L&T positional Chart for 845 & 481 Target CMP is 1345 Stop @ 1500

L&T is forming A-B-C pattern where point C has retraced by exactly 61.8% of A-B indicating top out was seen at point C. As per the pattern 100% Fibonacci Expansion of A-B From C comes to 481 level which I expect L&T to test in Medium to Long term. As per the pattern down side target is expected to be tested by last quarter of 2014.

It has also given a breakdown of the channel in which it was trading from Dec 2011 onward forming a Bear Flag Pattern which has given breakdown at 1385 and confirming the down trend. Height of the pole is  1080 and Breakdown is seen at 1395 level. If we take 50% of the pole height as the target then it comes to 540 points and breakdown below 1385 with 540 points will come to 845 level on lower side

Symmetrical Triangle Pattern Breakout in USDINR for target of 63.3 - 65.27

Trading Call: Buy at the level of 60.3 Stop Loss of 58.8 Target of 63.3 – 65.27 levels.

A symmetrical triangle pattern is relatively easy to identify. In addition, triangle patterns can be quite reliable to trade with very low failure rates. There is a caution concerning trading these patterns, however. As mentioned previously, a triangle pattern can be either continuation or reversal patterns. Typically, they are continuation patterns. To achieve the reliability for which the triangle is well known, technical analysts advise waiting for a clear breakout of one of the trendlines defining the triangle.

1. Occurrence of a Breakout - Technical analysts pay close attention to how long the triangle takes to develop to its apex. The general rule, as explained by Murphy, is that prices should break out - clearly penetrate one of the trendlines - somewhere between three-quarters and two-thirds of the horizontal width of the formation.6 The break out, in other words, should occur well before the pattern reaches the apex of the triangle. . Adherence to this rule is strongly advised by Yager, She adds that the closer the breakout occurs to the apex the higher the risk of a false breakout.

2. Price Action - Unlike ascending and descending triangles which give advance notice of their intentions, the symmetrical triangle tends to be a neutral pattern. Murphy advises that the symmetrical triangle is generally a consolidation pattern. This means an investor can look to see the direction of the previous trend and make the basic assumption that the trend will continue. However, many experts advise investors that because the breakout direction could go either way that they wait until the breakout occurs before investing in or selling the stock. Schabacker refers to a symmetrical triangle as a "picture of hesitation.

3. Measuring the Triangle - To project the minimum short-term price objective of a triangle, an investor must wait until the price has broken through the trendline. When the price breaks through the trendline, the investor then knows whether the pattern is a consolidation or a reversal formation. To calculate the minimum price objective, calculate the "height" of the formation at its widest part - the "base" of the triangle. The height is equal determined by projecting a vertical line from the first point of contact with the trendline on the left of the chart to the next point of contact with the opposite trendline. In other words, measure from the highest high point on one trendline to the lowest low point on the opposite trendline.

Both these points will be located on the far left of the formation. Next, locate the "apex" of the triangle (the point where the trendlines converge). Take the result of the measurement of the height of the triangle and add it to the price marked by the apex of the triangle if an upside breakout occurs and subtract it from the apex price if the triangle experiences a downside breakout.

For example, working with a symmetrical triangle, assume the highest high of the pattern occurs at 100 and the lowest low at 80. The height of the pattern is 20 (100 - 80 = 20). The apex of the triangle occurs at 90. The pattern has an upside breakout. Using the measuring rule, the target price is 110 (90 + 20 = 110).

4. Duration of the Triangle - As mentioned before, the triangle is a relatively short-term pattern. It may take up to one month to form and it usually forms in less than three months.

5. Forecasting Implications - Once breakout occurs, the symmetrical triangle tends to be a reliable pattern. Bulkowski calculates failure rates ranging between 2% and 6% for symmetrical triangles after a valid breakout.

To avoid mistaking a false move for a valid breakout, experts advise waiting a few days to see if the breakout is dependable. According to Murphy, minimum penetration criteria would be a closing price outside the trendline and not just an intraday penetration. Investors do have time once a breakout has occurred.18 According to Bulkowski, when considering symmetrical triangles, an investor will have over five months to reach the ultimate high after an upside breakout and less than half that time after a downside breakout

Because premature breakouts (where prices close outside of the trendline) are so common, don't dismiss the pattern if it has experienced such a breakout. According to Bulkowski, however, "premature breakouts do not predict the final breakout direction or success or failure of the formation."

USD/INR, working with a symmetrical triangle, the highest high of the pattern occurs at 57.3 and the lowest low at 48.60. The height of the pattern is 8.7 pips (57.3 – 48.60 = 8.7). The apex of the triangle occurs at 54.60. The pattern has an upside side breakout. Using the measuring rule, the target price is 63.3 (54.60 + 8.7 = 63.3).

With the above move it is also showing A-B-C Pattern Formation where it is expected to test 161% expansion of A-B from point C which comes to 65.27 levels. Point A is at 48.60 & Point B is at 57.30, point C at 51.34 has given retracement of 61.8% of the rise and confirming the upside target. Taking 161.8 % Fibonacci Expansion of the A to B from the point C, comes to higher level of 65.27 which can be seen in near term.

I maintain buy call from the previous report generated at 55.10 breakout for target of 59.75 which is achieved and still expect it to move higher. On lower side support of 58 is not expected to be broken and will continue the uptrend.

Previous report of buy was published on 23^rd May 2013 can be seen on following link: http://rajeevdarji.blogspot.in/2013/05/trading-call-buy-at-level-of-55.html

Reliance Symmetrical triangle breakdown @ 784

Reliance Symmetrical triangle breakdown @ 784 Height of the triangle os 104 poionts and sustain trading below 784 will bring to 680 target in near to medium term.

resistance is seen @ 810 CMP is 792

Fitch says China credit bubble unprecedented in modern world history

China's shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

"The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation," said Charlene Chu, the agency's senior director in Beijing.

"There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling," she told The Daily Telegraph.

While the non-performing loan rate of the banks may look benign at just 1pc, this has become irrelevant as trusts, wealth-management funds, offshore vehicles and other forms of irregular lending make up over half of all new credit. "It means nothing if you can off-load any bad asset you want. A lot of the banking exposure to property is not booked as property," she said.

Concerns are rising after a string of upsets in Quingdao, Ordos, Jilin and elsewhere, in so-called trust products, a $1.4 trillion (£0.9 trillion) segment of the shadow banking system.

GBPUSD One pager report (Bear Flag Pattern Formation)

Bear Flag is a sharp, strong volume decline, several days of sideways to higher price action on much weaker volume followed by a second, sharp decline to new lows on strong volume. 
The technical target for a bear flag pattern is derived by subtracting the height of the flag pole from the eventual breakout level at point (e). 
Even though flags and pennants are common formations, identification guidelines should not be taken lightly. It is important that flags and pennants are preceded by a sharp advance or decline. Without a sharp move, the reliability of the formation becomes questionable and trading could carry added risk. Look for volume confirmation on the initial move, consolidation and resumption to augment the robustness of pattern identification.

Bearish flags are comprised of higher tops and higher bottoms. "Bear" flags also have a tendency to slope against the trend. Their trendlines run parallel as well.

• Sharp Move: To be considered a continuation pattern, there should be evidence of a prior trend. Flags and pennants require evidence of a sharp advance or decline on heavy volume. These moves usually occur on heavy volume and can contain gaps. This move usually represents the first leg of a significant advance or decline and the flag/pennant is merely a pause.
• Flagpole: The flagpole is the distance from the first resistance or support break to the high or low of the flag/pennant. The sharp advance (or decline) that forms the flagpole should break a trend line or resistance/support level. A line extending up from this break to the high of the flag/pennant forms the flagpole.
• Flag: A flag is a small rectangle pattern that slopes against the previous trend. If the previous move was up, then the flag would slope down. If the move was down, then the flag would slope up. Because flags are usually too short in duration to actually have reaction highs and lows, the price action just needs to be contained within two parallel trend lines.
• Break: For a bullish flag or pennant, a break above resistance signals that the previous advance has resumed. For a bearish flag or pennant, a break below support signals that the previous decline has resumed.

Targets: The length of the flagpole can be applied to the resistance break or support break of the flag/pennant to estimate the advance or decline.

Looking at the chart GBPUSD is trading near the critical resistance at 1.5680 and is expected to give a sharp reversal from current level. If the resistance of 1.5700 is holding and sustain trading is seen below 1.5500 will enter in negative trend where on lower side it will move and test the lower trend line where it can test the level of 1.5050 support level where point E is expected to test and sustain trading below 1.5050 will confirm the down side breakdown of the Bear Flag Pattern. Height of the Pole is 1420 Pips (1.6250 – 1.4830). Immediately it is expected to test support at 1.5050 and Bear flag pattern breakdown is expected at same level. Sustain trading below 1.5050 will bring lower level target of 1.3600[(1.6250-1.4830)-1.5050] height of the Pole from the Breakdown point of 1.5050 level.

EURO One Pager Report (Bear Flag Pattern Formation)

Bear Flag is a sharp, strong volume decline, several days of sideways to higher price action on much weaker volume followed by a second, sharp decline to new lows on strong volume. 
The technical target for a bear flag pattern is derived by subtracting the height of the flag pole from the eventual breakout level at point (e). 
Even though flags and pennants are common formations, identification guidelines should not be taken lightly. It is important that flags and pennants are preceded by a sharp advance or decline. Without a sharp move, the reliability of the formation becomes questionable and trading could carry added risk. Look for volume confirmation on the initial move, consolidation and resumption to augment the robustness of pattern identification.

Bearish flags are comprised of higher tops and higher bottoms. "Bear" flags also have a tendency to slope against the trend. Their trendlines run parallel as well.

• Sharp Move: To be considered a continuation pattern, there should be evidence of a prior trend. Flags and pennants require evidence of a sharp advance or decline on heavy volume. These moves usually occur on heavy volume and can contain gaps. This move usually represents the first leg of a significant advance or decline and the flag/pennant is merely a pause.
• Flagpole: The flagpole is the distance from the first resistance or support break to the high or low of the flag/pennant. The sharp advance (or decline) that forms the flagpole should break a trend line or resistance/support level. A line extending up from this break to the high of the flag/pennant forms the flagpole.
• Flag: A flag is a small rectangle pattern that slopes against the previous trend. If the previous move was up, then the flag would slope down. If the move was down, then the flag would slope up. Because flags are usually too short in duration to actually have reaction highs and lows, the price action just needs to be contained within two parallel trend lines.
• Break: For a bullish flag or pennant, a break above resistance signals that the previous advance has resumed. For a bearish flag or pennant, a break below support signals that the previous decline has resumed.

Targets: The length of the flagpole can be applied to the resistance break or support break of the flag/pennant to estimate the advance or decline.

Looking at the chart EURUSD is trading near the critical resistance at 1.3300 and is expected to give a sharp reversal from current level. If the resistance of 1.3300 is holding and sustain trading is seen below 1.3200 will enter in negative trend where on lower side it will move and test the lower trend line where it can test the level of 1.2850 support level where point E is expected to test and sustain trading below 1.2850 will confirm the down side breakdown of the Bear Flag Pattern. Height of the Pole is 960 Pips (1.3710 – 1.2750). Immediately it is expected to test support at 1.2850 and Bear flag pattern breakdown is expected at same level. Sustain trading below 1.2850 will bring lower level target of 1.1890[(1.3710-1.2750)-1.2850] height of the Pole from the Breakdown point of 1.2850 level.

Golden Wave - One Pager Positional Report

Gold Cup & Handel Formation from 1996 – 2006 – 10Years Move.

Cup with Handle (Continuation)

The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance.

1.       Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation or the less upside potential.

2.       Cup: The cup should be "U" shaped and resemble a bowl or rounding bottom. A "V" shaped bottom would be considered too sharp of a reversal to qualify. The softer "U" shape ensures that the cup is a consolidation pattern with valid support at the bottom of the "U". The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.

3.       Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance. However, with volatile markets and over-reactions, the retracement could range from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which conforms with Dow Theory.

4.       Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times it is just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement, the more bullish the formation and significant the breakout. Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.

5.       Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.

6.       Volume: There should be a substantial increase in volume on the breakout above the handle's resistance.

7.       Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.

In 1996 GOLD has tested higher level of 418$ which was all time high at that level and then slowly it went in to side way to down side move testing the level of 250$ in 1999 and 2001 year. There after slight upside move was seen gradually where the top resistance was tested at 430$ where the CUP formation is seen and there after Handel formation was seen where breakout was at 420$ level. Height of the CUP is 180 points and after the breakout point gold gave sharp rise after slight consolidation where it tested the level of 730$ mark. This rise was 161.8% rise from the breakout point of 420$ where the target of 711$ was tested. [(180*161.8% = 291 points) – (Breakout @ 420$ + 291 Points = 711$)]

Elliott Wave Theory was developed by R.N. Elliott and popularized by Robert Prechter. This theory asserts that crowd behavior ebbs and flows in clear trends. Based on this ebb and flow, Elliott identified a certain structure to price movements in the financial markets. The article serves as a basic introduction to Elliott Wave Theory. A basic 5-wave impulse sequence and 3-wave corrective sequence are explained. While Elliott Wave Theory gets much more complicated than this 5-3 combination, this article will only focus on the very basics.

There are two types of waves: impulse and corrective. Impulse waves move in the direction of the larger degree wave. When the larger degree wave is up, advancing waves are impulsive and declining waves are corrective. When the larger degree wave is down, impulse waves are down and corrective waves are up. Impulse waves, also called motive waves, move with the bigger trend or larger degree wave. Corrective waves move against the larger degree wave.

From the above chart Gold has started its upside rally from the level of 410$ and tested the level of 1032$ which was the starting of the Wave Theory and it was the I Wave. There after minor correction was seen from 1032$ to 682$ in the form of wave II  which was just near to 50% retracement of wave I, there after it enter in wave III. Looking at the wave III it tested the higher level of 1920$ and it has retraced by 200% of wave I from the bottom of wave II, and exactly tested the higher level of 1920$ and started its correction in the form of wave IV. Currently it is in the continuation of the wave IV where it is forming a-b-c pattern, wave b has corrected by 61.8% of wave a and is trading below 100% expansion of a-b from c indicating 161.8% expansion of 1168$ is expected to test on lower side. Wave IV if we calculate on retracement level is expected to retrace by 61.8% of wave III which also brings to 1150$ in same line of a-b-c pattern. It is clear that the wave IV is expected to test level anywhere between 1162$ to 1150 where 1150$ is the 61.8% retracement of wave IV from 682$ to 1920$. From the lower range of 1162$ to 1150$ reversal in prices are expected and entering in the V impulsive wave on higher side Gold can move and test the level above 3034$ which is 300% retracement of wave I from bottom of wave IV. Concluding to the above theory any dip near the range of 1162$ to 1150$ will be the positional entry level for the target of 3000$ and above in near to medium term.

Three Guidelines

There are numerous guidelines, but this article will focus on three key guidelines. In contrast to rules, guidelines should hold true most of the time, not necessarily all of the time

Guideline 1: When Wave 3 is the longest impulse wave, Wave 5 will approximately equal Wave 1.

Guideline 2: The forms for Wave 2 and Wave 4 will alternate. If Wave 2 is a sharp correction, Wave 4 will be a flat correction. If Wave 2 is flat, Wave 4 will be sharp.

Guideline 3: After a 5-wave impulse advance, corrections (abc) usually end in the area of prior Wave 4 low.

Wave Count flow chart

Year	Start	Finish	Difference	% retrace
May 2005	410	1032	622	100 Base
March 2008	1032	682	350	56%
October 2010	682	1920	1238	200%
September 2011	1920	1168	752	161% expansion a-b-c
September 2011	1920	1150	770	121% retracement
Expected 2013 end	1150	3034	1866	300% retracement of wave I from wave IV

Reliance Positional Head & Shoulder Pattern CMP is 787

Reliance is expected to take initial support @ 784 and further trading below Neckline support is seen @ 764 on closing basis. If this support is further broken then Head & Shoulder Pattern breakdown is confirm which will bring it to first target of 670 and then after short consolidation will bring it further down to test 588 which is the height of the head as the actual target after the break down. 

L&T Positional Target 940 CMP is 1380

L&T is forming symmetreical triangle formation where breakdown is seen @ 1390 and sustain below the same will bring to 970 - 940 on lower side and this is just 50% fall of the height of the triangle which is from point A - 1870 to Point B 970 bringing 900 Point as the height.