Ashish Kyal, CMT
Hurst’s Time cycle is an important way of forecasting important lows for any index or stocks. The Nifty50 has been following a very important ‘Time Cycle’ for many years that we have been using.
Look at the below daily chart of Nifty and see why we are not completely out of the woods at least till the last week of May 2020.
Hurst’s Time cycles:
Now let us understand a few concepts about Time cycles to see which are important dates based on it.
- The Nifty has so far retraced a mere 38.2% of the entire crash we saw in February to March 2020. This is taken from the point of completion of wave G till the low of 7,511 which completed the first leg of fall.
- After that, prices have been moving in a non-trending fashion but drifting higher.
- The top at 11,500 was predicated weeks earlier that the same will not be taken out until the end of May and that has paid off extremely well. This was mentioned in the first week of March in the daily research. The basis of this is once the cycle lows are broken the top made should remain intact until the next cycle low date which is only by the end of May.
- We are again entering into the cycle sell mode. However, prices are yet to confirm a negative reversal and after we break the important support levels the reversals can be very fast and quick.
- Probably it will coincide with the partial opening of lockdown as we can see Nifty formed important lows post the lockdown announcement and extension of the same.
- Markets tend to do things that the majority do not expect and the pullback amidst all the pessimism is a classic example of the same.
- As the lockdown relaxation happens many will start expecting markets to rally but we think the cycles will put pressure on prices.
In a nutshell, we are going to enter May and the famous Wall Street adage “Sell in May and Go Away” might become applicable again.
We will turn bullish once the cycle lows are in place which kicks in only by the end of May, but until then keep a close watch on support zone and if that gets broken get ready to ride the trend again!
Any strong momentum above 9,500 will indicate an alternative scenario but multiple negative divergences on RSI is not hinting any momentum buildup for now.
Stay alert and not complacent as we enter into important dates of reversals!
(The author is CEO Waves Strategy Advisors. He could be reached on Twitter at @kyalashish)
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