LICHSGFIN: How to use ADX indicator to create a trade set-up
Ashish Kyal, Chartered Market Technician, Author
Founder "Waves Strategy Advisors / Ashish Kyal Trading Gurukul" and Author of Effective Trading in Financial Markets using Technical Analysis. Featured on National Stock Exchange (NSE), IIM Trichy, Paytm
Nifty has been moving with high volatility so creating a proper trade set-up at such times becomes difficult. Moreover booking profits and having a proper risk management becomes important to protect the capital. We have been able to capture moves in various stocks using different indicators and Elliott Wave coupled with other techniques.
LIC Housing Finance is yet another stock wherein we were able to create a trade set-up with the help of Elliott Wave and the ADX indicator. Below is the chart published in our daily report “The Financial Waves STU”.
LIC Housing Finance Daily chart:
LIC Housing Finance 60 mins chart: Anticipated as on 11th September 2018
LIC Housing Finance 60 mins chart: Happened as on 14th September 2018
Wave analysis:
(Below is the extract of research published in the report)
We have shown ADX indicator on daily chart that displays strength of the trend and also confirms the direction with the help of +DI (Directional Indicator) and -DI. If +DI crosses above the –DI it indicates that the direction of the trend is positive. The +DMI (green) is moving below –DMI (red) suggesting negative move. If we observe well whenever the distance among these two lines increases we see continuous downwards movement and when they are nearing convergence we see range bound movement. Here we are witnessing the former scenario, hence further downmove is expected.
As shown in the hourly chart, prices are currently moving in wave iii of (c). Also, the EMA and channel are working very well and one can make use of the channel support and resistance for taking short-term positions. Any pullback can be used as a shorting opportunity for capturing a move towards 480.
In short, LIC Housing Finance looks negative. Any pullback towards 490 can be used as a shorting opportunity for a move towards 480 levels. The level of 500 can be used as short-term resistance.
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