Tata Steel Ltd in Wave 3?
Tata Steel Ltd in Wave 3?

For a while now we have been working under the paradigm that Indian stock markets have bottomed out, and we are in a new bull market. In the case of many stocks this translates into a third wave position at the present time because we have already seen a deep wave 2 correction earlier. However, it was hard to recommend an aggressive buy because unlike a normal 3rd wave, the current rally was going up slowly, yet steadily. We wanted to see a sharp move higher! Of course, being honest to Elliott Wave Principle (because we are using Elliot Wave Analysis to identify low-risk trading opportunities), we should have known that a third wave can come alive all of a sudden. So have we lost a great buying opportunity? Perhaps! But all is not lost. As the attached chart shows, the first and third waves within the current third wave have been of normal proportions. This means we should expect the fifth wave to go farther than the other two. Again, if what we are seeing is only the first 5-legged step of a much bigger third wave, then we have not missed anything at all. There are however, some caveats. For example, we should not trade below the 230 level from here on. If that happened, we should run for cover. A move that violates the 230 level now will be considered as an overlap of the first wave, and this is a big NO-NO under Elliott Wave Principle. Tomorrow, I will look at some other charts. Stay tuned.