Observations - we are looking at Post 2008 Global meltdown era - the chart here is Nifty weekly chart - we have used 252 week EMA for our thesis
- A Cycle here is defined as the rise of Nifty from 252 week EMA - making a top and then retesting the 252 week EMA - correction only to the point of 252 EMA is taken in to consideration - to cut off the noise, only time cycle where the candlestick is more than 104 weeks (2years) is considered
Cycle 1 - we see 80 weeks of Rising phase giving returns to the tune of 84% before peaking out - the correction phase lasted 55 weeks and gave negative returns of 28.5%
Cycle 2 - In 79 weeks in the Rising phase, Nifty gave 79% approximately & - in Correction phase it corrected 24.5% in 47 weeks
Cycle 3 - this was an exceptional phase as the Rising phase lasted 205 weeks before peaking out and gave returns of 81.5% approximately & - the correction phase was the shorted and correction up to 252 week EMA was done in just 7 weeks which was 19% below the 12430 peak (again note we are not talking about full correction which was 39% but only correction up to 252 EMA here)
Cycle 4 - In the current cycle, if 18604 level is our peak so far, it was reached in 72 weeks giving returns of 89% - the correction phase has already done 51 weeks so far & counting
Interesting co-relations - Except for Cycle 3, The rising phase has been between 70-80 weeks - All the 4 Rising phase have given returns to the tune of 80-90% approximately
- All the correction phase has been shorter than Rising phase - currently 252 week EMA is approximately 26% away from the recent peak corelating well with historical corrections
Wow... that was too much of data analysis.😀
Whether Nifty retests 252 week EMA or not; only time will tell. All we can do is plan for it, be prepared and if opportunity does comes then be in control of the situation and make the most of it...😊
I hope the analysis would help you in planning your trade and investments...
AIM FOR THE BEST... PLAN FOR THE WORST !
Do let me know what you think in the comment section below
You can Thank me with a little Like and you can follow me of course. Feel free to share it, if you think it could help some one plan their trade and investment. It would make me feel the effort was worth it 🙏🙏
Take care & safe investing / trading...!!!
Disclaimer - The view expressed here is my personal view - Past performance is not a guarantee for future predictions - I have been wrong in the past and can be wrong again in future too - Use this for educational purpose - Any decision you take, you need to take responsibility for the same - It's your hard earned money. Treat it wisely - Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance - if trading in F&O, understand that F&O trading involves risk - Do take proper risk management measures - Do your own analysis and consult your financial adviser if need be
Interesting analysis correlating well with historical data. For my personal learning I will keep this chart in my folder to see how this story unfolds. I think analysis like this can help to improve our perspectives in this markets. Thanks for this analysis.
indiamarketoutlook
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@ardoiphode16, Happy to know the analysis is of help 🙏🙏
vKHAN18
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Correction is Healthy, dont panic y'll!
Parasuram
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whats so specail about 252 ema? do market players follow that.. why cant we talk 200 weekly emi? plus what fib levels.. markets needs to correct 31.8% minimum to call it a meaniful correction... US Markets have done 50% to the post pandemic rally. we have hardly done less than 20%
indiamarketoutlook
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@Parasuram, When it comes to trading days in a month, we have 21 trading sessions in a month (8 Saturday Sundays and on an average 1 festival / celebration holiday per month. Multiplying 21 days * 12 months we get 252. For me, this represents a better picture of 1 year average and makes much more sense to use it. So have started using 21 bar EMA (in daily charts it represents 1 month average), 63 bar EMA (in daily charts it represents 3 month average) and 252 bar EMA (in daily charts it represents 1 year average) across all time horizons.
Regarding comparison with US market, here are some interesting stats for you... Just a couple of months back Taiwan was well ahead of Nifty, today Taiwan is 4000 points adrift, Shanghai was at par with Nifty in 2007, today is trading at hardly 20% value of Nifty
Before 2008, Hangseng was 10000- 12000 higher than Sensex, today even Nifty (which is 1/3 of Sensex is higher) FTSE in 2007 was at 6650... after 15 years FTSE is just 200 points up from those levels at 6850 odd levels...
While other market chart analysis is good for reference in extreme short term but the above stats clearly suggests that each chart has it's own story... We are in a different economic life cycle than compared to any of our peers. Let's take it one step at a time and see the story unfold
For my personal learning I will keep this chart in my folder to see how this story unfolds.
I think analysis like this can help to improve our perspectives in this markets.
Thanks for this analysis.