In an Uptrend, Look to Buy.

In Trend Analyzer, a Technical Analysis software provided by S2 Analytics ( I own the business), there is a tool to automatically draw waves. Sometimes, the software will not detect any waves and says so. Often, it will display a wave count that fits the latest price data. Now, auto generation of a complex structure is not possible since the waves theory has too many ifs and buts. More important, accuracy to fit the theory, is not needed.

I applied the Up wave tool to a 60 minute chart of tata Power, and this is what was projected.

What is the message? The instrument is in an uptrend. After an up move it sees a pullback. (2 after 1, and now 4 after 3). Currently, it is in a pullback of some kind. The main trend which is UP is likely to resume soon.

What should the trader do? Identify the point at which the trend becomes uncertain. This is the stop loss. Then decide to buy now, buy at a lower level, or buy on sign of strength. Take the trade, and let market forces decide the outcome.

The complexity of the wave counts is irrelevant here. The main trend was identified with the Wave tool, and trading tactics can then be applied. Listen to the message of the market.