Elliott Wave Analysis and Outlook for 15 Jul 2019

| July 14, 2019

ENifty opened higher at 11601, bounced further to register day’s high 11639 but declined back sharply by 100 points to register day’s low 11538 and finally closed 30 points down at 11552.

Yesterday, 11596-11659 was immediate resistance and 11659 was immediate upside breakeven point, Nifty was expected to decline towards 11461 again without breaking higher above 11659. 11569-11551 was intraday support and 11551 was immediate downside breakeven point.

Nifty first declined to enter in support 11569-11551, registered low 11553 and bounced to enter in resistance range 11596-11659 and then declined by 100 points from resistance without breaking above upside breakeven 11659. Now, let’s have a fresh look at latest charts for further scenario.

This analysis report is covering move after 6825 and earlier wave counts are explained in my last “All Time Frames” analysis report Fresh Elliott Wave Analysis of Nifty on All Time Frame dated 03 Jun 2018.

Elliott wave analysis of daily chart of Nifty

This is daily time bar chart of Nifty covering bounce after low 6825 which I marked as start of wave [V] on daily chart in my last “All Time Frames” Report.

The last bounce from 9951-11760 looks like a 3 waves move and Nifty declined very sharply from 11760 without completing Impulse or ED Pattern. So, wave counts and personality of move is indicating the possibility of Irregular Correction at top.

So, may be inner wave ‘3’ of [v] is completed at 11171 and ‘4’ may be completed at  Irregular Correction at 10004 and wave ‘5’ may be in progress. Wave ‘5’ achieved minimum projections after breaking above 11761 whereas next 61% projection is placed at 12689 which may or may not be achieved. Wave 5 achieved 12103 but pattern doesn’t seem completed.

So, let’s analyse the progress of wave 5 started from 10004 separately to calculate internal moves.

Elliott wave analysis of daily chart of Nifty

This is again daily time bar chart of Nifty covering bounce after 10004 which I marked as start of inner wave ‘5’ of [v] on daily chart.  

It seems, inner wave (1) of 5 completed from 10004-10985, wave (2) may be completed from 10985-10585 Double Irregular Correction and wave (3) may be completed from 10585-12103 and wave (4) may be in progress.

23%-38% retracement of wave (3) is placed at 11744-11523. So 11744-11523 is major support and 11523 is major downside breakeven/trend reversal point.

Wave (3) is less than 161% (not extended), so wave (5) needs to be extended (project more than 61%). Minimum 61% projection for wave (5) would be 1297 points.

Overall, 11523 is major trend reversal point. Nifty can bounce by 1297 points without breaking below 11523 but if it manages to break and stay below 11523 for complete sessions can turn the major pattern into Irregular Correction and can result in further fall towards 10585-10004.

Nifty broke 11523 but didn’t trade below 11523 for whole session, so let’s have a separate look at progress of wave (4) started from 12103 on separate lowest possible time frame to check if its pattern is completed or not.

Elliott wave analysis of hourly chart of Nifty

This is hourly time bar chart of Nifty covering bounce after all time high 12103 which I marked as start of wave (4) on daily chart.

There is possibility for this decline to be Double/Triple Zigzag correction with first (abc) cycle completed from 12013-11769, wave (X1) completed from 11769-12000, 2nd (abc) cycle completed from 12000-11625, wave (X2) completed from 11625-11981 as Double Zigzag Correction and last (abc) cycle may be in progress.

Last (abc) cycle achieved its minimum requirements after breaking below 11625 but pattern is not clear. Pattern of decline must be corrective (abc) but we are not able to identify its inner waves because of very sharp decline.

So we have 3 separate conditions on this chart: –

  1. If decline after 12103 is Triple Zigzag Correction then maximum limit for last (abc) cycle is Lower Red Line (extended line joining C1-C2). So, we can’t assume Nifty further Bearish as long as this lower line is intact.
  2. If the decline after 12103 is (abc) (as marked by blue letters with question mark), the 100%-123% projection for wave (c) is placed at 11503-11390. 100% is achieved and we can’t assume Nifty bearish as long as wave (c) is in 100%-123% range.
  3. Nifty entered in Gap formed at 11426-11590, so Nifty can bounce after filling the gap.

Overall, Major breakeven point 11523 is broken and closed below 11523 but still we need to observe further move for confirmation of reversal. We need to concentrate on Internal Patterns till then.

23-38% retracement of last down wave (from 11981-11461) is placed at 11583-11659. So, 11583-11659 is immediate resistance, and Nifty didn’t bounced strongly after a sharp decline so there is possibility of one more down leg from resistance for low below 11461. Nifty already entered in resistance with Corrective pattern and declined, so let’s have a separate look at bounce after 11461 to check its pattern.

Elliott wave analysis of 5 minutes chart of Nifty

This is 5 minutes time bar chart of Nifty covering bounce after 11461 which I am analysing independently. The pattern of the bounce from 11461-11639 is corrective.

It seems wave (a) completed from 11461-11582, wave (b) may be completed from 11582-11475 as Irregular Correction and wave (c) may be completed from 11475-11639 or still in progress [Last wave (v) of (c) looks like a 3 waves move, so we are not sure if wave (v) is completed or there is Irregular Correction again] .

23%-38% retracement of progress of wave (c) is placed at 11600-11576 and same is already broken, so there is possibility for further decline towards 11461 in coming sessions.

There decline from 11639-11538 can be wave (i), (ii), (iii) or may be Impulse is already completed. The decline is sharp so it is difficult to identify exact inner waves. 38%-61% retracement of this decline is placed at 11576-11600.

23%-38% retracement of wave (c) and 36%-61% retracement of decline after 11639 are placed exactly same at 11576-11600, so this 11576-11600 can act as good resistance for Monday.

Conclusion

Overall, 11523 is major trend reversal point and Nifty closed below it but didn’t stay below 11523 for whole session. We need to wait for further move to confirm reversal because there are other factors in play (explained on hourly chart)

For short term/Intraday, Nifty has possibility for decline towards 11461 and 11576-11600 is immediate resistance. But Nifty will not be positive even if bounce above 11600 because 11659 is till the upside breakeven.

We can think of any upside reversal only if Nifty trades above 11659 for more than 15 minutes. We need to check the pattern after break above 11659 to confirm reversal.

We need to keep all these conditions in mind while planning next trade.

Trading Points of View:

Nifty broke major trend reversal point 11523 but didn’t stay below it for whole session. Nifty can turn negative only if stay below 11523 for whole session of close below it for 02 days. There are other factors also in play, so we can’t decide any trade based on this breakeven point yet.

For Intraday or Very Short Term, overall trading strategy is “Selling on Rise” expecting targets below 11461 as long as Nifty is trading below 11659.

Those who are already holding shorts from Friday’s highs can use 11581 (some points above 11576) as trailing stoploss for shorts. But if stoploss triggers then we need to observe pattern in 11576-11600 range to decide fresh trade.

(There is possibility of Irregular Correction at Friday’s top and Nifty can bounce above 11639 again in this case. So, trailing stoploss must be used to protect profit and we need confirmation from pattern for fresh shorts).

Further, I will update about formation of any important internal pattern or any change in trend/pattern/important levels or fresh support/resistance/breakeven point during market hours by WhatsApp Broadcast to all my “Nifty Live Updates” subscribers.

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Category: Nifty

About the Author ()

Deepak Kumar is an independent Technical Analyst, regular practitioner and Trainer of Elliott wave theory applying Elliott's Wave Principles on Indian Markets successfully since 2011 and made many accurate predictions. He is also the author of book "Practical Application of Elliott's Wave Principles by Deepak Kumar"

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