IDFC: Elliott Wave Counts or Banking License Assurance?

IDFC is been in news in Dalal Street from some time especially when there was an outbreak that IDFC has more chances to get the banking license then the other candidates. Many analysts, brokers, investors and traders are very bullish for this stock. Does news really drive the stock prices?

To know the answer we used Elliott Wave analysis to get the objective answer. This advance technical analysis is very useful tool to take proper trading decisions and helps to initiate trade with proper risk/ reward ratio.

From the below daily chart we can observe that prices has given a bullish break in the falling red channel which has pushed prices higher till 106 after giving break on 4th March 2014. Is this breakout going to sustain? Or it will start its down move?

We have used Elliott Wave which says that one more leg on the downside is still pending which can come very soon before the up move starts. The reason is after making a high of 117 in the month of December 2013 prices came down in a corrective fashion and then it started moving up in the same manner which clearly suggests the stock is moving in complex correction. The current up move is also a part of a corrective wave. Using simple technical tools along with Elliott wave can also help in finding the resistance and the support for a particular asset class. We have used moving average concept to find out the resistance of the current corrective move. 200 day moving average (purple) has been a resistance for this stock and it has arrived near it. Historically from past 9 months prices have not moved above this moving average.

In short, be cautiously positive for IDFC as it can start moving down very soon which will complete one higher degree wave and may start its next up move soon. For investors and trader it is better to buy on dips 


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