Technical Analysis with Elliott Waves: A Combined ApproachHello friends, Welcome to RK Charts!
This Educational Post is based on technical analysis, specifically how to initiate analysis on a chart, and what points to consider. This is purely for Educational purposes.
This is not a trading or investing tip or advisory. Rather, it's a comprehensive guide on how to easily analyze a chart, intended for educational purposes. I hope that by reading and understanding this post, you'll gain valuable knowledge and insights. Your focused effort to understand this will surely provide you with something valuable and easy to grasp.
Let's dive in, During technical analysis, what we had observed certain points in this chart, I'm highlighting them here:
1. Resistance line breakout, where the price has closed above it.
2. The volume within that breakout.
3. The price closing above Weekly Exponential Moving Averages.
4. Elliott Wave Counts.
5. Projected Target along with Invalidation level as per Elliott Wave theory.
6. Projected Duration for Projected Targets.
Breakout of Resistance zone with Good Volume intensity:
So, friends, here we can clearly see on the chart that this is a weekly time frame chart of Shipping Corporation of India Limited. Over the last eleven months, from July 2024, the price has been falling, remaining largely bearish, but has now broken out of Curved Resistance Trendline for the first time with a bullish candle on Weekly (Closing basis), accompanied by good volume intensity.
Alongside this, the price has sustained and closed above Major EMAs:
- 50-Weekly Exponential moving average (red line plotted on the chart)
- 100-Weekly Exponential moving average (blue line plotted on the chart)
- 200-Weekly Exponential moving average (black line plotted on the chart)
on the weekly time frame.
Elliott Wave Theory:
Considering the Elliott Wave structure, if we look at it theoretically, the top it made on July 2024, was the completion of Wave III. After that, it completed Wave IV in 7 swings (WXY) and is now possibly moving higher, making higher lows. It has closed above the moving averages, broken out of the Curved Trendline, and has strong volume. So, possibly, we are unfolding an impulse Wave V.
In Elliott Wave Theory, the invalidation level means that the price should not go below that level, which in this case is the low of Wave IV at ₹130. If the price goes below that level for any reason, even by a single point, our wave counts will be invalidated, and we'll have to re-analyze the chart.
That's why we call it the invalidation level. Analysts and traders also refer to it as a stop-loss level. So, in Elliott Wave Theory, our wave counts remain valid as long as the price stays above the invalidation level and doesn't trigger it.
Now, regarding the target, if we take the measurement of Wave IV and calculate its 1.236 level, the target for Wave V should be above the high of Wave III. According to Elliott Wave Theory, the projected target for Wave V is near ₹440, which is the 1.236 Fibonacci level.
Projected Duration for Projected Targets:
In the chart analysis we conducted, where we prospectively projected a target, if everything goes right and the invalidation level is not triggered, what could be the duration of this target? It will definitely take more than a medium-term duration, maybe even a long-term duration.
This is because each candle represents a week, and we're currently looking at the weekly time frame. Since the fourth wave has just ended and the fifth wave is upcoming, it will take a long-term duration
I am not Sebi registered analyst.
My studies are for educational purpose only.
Please Consult your financial advisor before trading or investing.
I am not responsible for any kinds of your profits and your losses.
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Hope this post is helpful to community
Thanks
RK💕
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The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Chaarts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Chaarts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
