Spotting the Trend: The Birth of Wave 3Technical Analysis Using Elliott Wave Principles on exampled chart of SBI Cards (Daily Time Frame)
This analysis is for educational purposes only and is not intended as financial or trading advice. Market movements are inherently uncertain, and the analysis is based on one possible interpretation of the Elliott Wave structure. Please consult a financial advisor before making any trading or investment decisions.
Introduction to Elliott Wave Principles:
Elliott Wave Theory is an analytical framework that helps traders and investors understand market psychology through price movement patterns. The theory suggests that market prices unfold in waves, which are driven by collective investor behavior. The patterns consist of five waves in the direction of the main trend, followed by three corrective waves. Understanding these wave patterns allows us to anticipate future price movements with greater accuracy.
Key Elliott Wave Principles:
1. Five-Wave Impulse Pattern: The primary trend unfolds in five waves (1-2-3-4-5). Waves 1, 3, and 5 move in the direction of the trend, while waves 2 and 4 are corrective.
2. Three-Wave Corrective Pattern: After a five-wave sequence, a correction typically follows, consisting of three waves (A-B-C) that move against the primary trend.
3. Wave Relationships: Fibonacci ratios play a crucial role in Elliott Wave analysis, often governing the length of the waves.
4. Wave Characteristics: Each wave has its own set of characteristics. For example, Wave 3 is usually the most powerful, showing the strongest price movement, while Wave 5 may signal the final push before a significant correction.
Current Elliott Wave Analysis on SBI Cards
Wave Structure Overview:
- The analysis focuses on the daily time frame of SBI Cards, where we can identify a completed corrective pattern and the beginning of a new impulsive wave structure.
Wave Count Details:
1. Primary Count:
- The chart indicates the possible completion of Wave ((2)) in black, marked by a complex corrective structure, ending near the 493.30 level.
- The price has likely begun unfolding Wave ((i)) of Wave 1 in red of the larger Wave ((3)) in black.
2. Current Daily Structure:
- Wave ((2)) seems to have completed with a three-wave corrective move, labeled as A-B-C. The final wave C (marked in red) appears to have ended at 493.30, representing the termination point of Wave ((2)).
- Following this, the initial sub-waves of Wave 1 (red) have begun forming, with Wave ((i)) currently unfolding.
- The nearest Invalidation Level for this wave count is 647.95. A break below this level would invalidate the current count, requiring a re-evaluation.
Wave ((3)) Characteristics and Projections:
- Wave ((3)) Characteristics: As per Elliott Wave Theory, Wave ((3)) is often the most dynamic and extended wave, reflecting strong momentum in the direction of the main trend. It’s typically the longest and most powerful of the impulsive waves, often reaching or surpassing the 1.618 Fibonacci extension of Wave ((1)).
- Target Levels: For Wave ((3)) in black, potential targets could be calculated using Fibonacci extensions from Wave ((1)) & ((2)), projecting prices towards 161.80%, hear possibility for short to medium term could be 960.00 and beyond if Invalidation level is not Triggered, depending on the strength of the momentum.
- Invalidation Level: If the price drops below 647.95, it would invalidate the current wave count, indicating that Wave ((2)) may still be in progress or that an alternative structure is developing.
Conclusion:
The analysis suggests that SBI Cards may have completed a major corrective wave and is now in the early stages of a new impulsive sequence. The focus should be on the development of Wave ((3)) in black, which has the potential to drive prices significantly higher if the wave count holds true. As always, this educational analysis is not intended as trading advice, and one should consult with a financial advisor before making any investment decisions.
I am not Sebi registered analyst.
My studies are for educational purpose only.
Please Consult your financial advisor before trading or investing.
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Disclaimer and Risk Warning.
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_Charts 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_Charts 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.
