Elliott Wave Analysis and Outlook of Nifty for 02 July 2018 Onward

| July 1, 2018

Nifty opened higher at 10612, bounced further and traded with strength for rest of the day. Nifty bounced by more than 130 points to register day’s high 10723 and closed 125 points up at 10714.

Yesterday, Nifty was in very complex type of pattern but one bounce towards 10780-10805 was expected very soon. 10615-10651 was immediate resistance and 10651 was breakeven point. Nifty if breaks and stays above 10651 was expected to bounce further towards 10780-10800.

Trading strategy was to buy Nifty if breaks and trades above 10651 for 15 minutes using stoploss of 10619 expecting bounced towards 10780-10800 in coming days. Nifty traded above 10651 for 15 minutes and bounced further till 10723 without triggering stoploss. Now, let’s have a fresh look at latest charts for further scenario.

This analysis report is covering move after 9951 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 Nifty on daily chart

Elliott Wave Analysis of Nifty on daily chart

This is 5 Hour time bar chart of Nifty covering bounce after low 9951 which I marked as start of wave ‘v’ on daily chart in my last “All Time Frames” Report. There is no change in wave counts on this chart.

It seems wave (1) completed from 9951-10229, wave (2) completed from 10229-10111 as Irregular Correction and wave (3) may be completed at 10929, wave (4) may be completed at 10417 as Simple Zigzag and wave (5) may be in progress. [Wave (4) retraced deeper than 38%).

Minimum 38%-61% projection for wave (5) is placed at 10790-11021 but end of wave (3) is 10929. So, 10929-11021 is minimum target range on upside in this case.

Nifty can decline below 10417 only if wave (4) turns into Complex Correction (Double Zigzag or Triple Zigzag) otherwise Nifty is heading for high above 10929 again. And we can get clue of next possibility by analyzing the progress of wave (5) started from 10417.

So, let’s analyze the progress of expected wave (5) started from 10417 on lowest possible time frame chart to check its pattern closely.

Elliott Wave Analysis of Nifty on hourly chart

Elliott Wave Analysis of Nifty on hourly chart

This is hourly bar chart of Nifty covering bounce from 10417 which I have marked as start of wave (5) on 5 hourly chart. There is change in wave counts.

There is an [abc] bounce from 10417-10893 followed by a progress of Complex correction (Double Zigzag till now) from 10893-10557.

So, there is possibility of Ending Diagonal Triangle in progress with inner wave [i] of ED from 10417-10893, [ii] from 10893-10557 as Double Zigzag correction and wave [iii] of ED may be in progress. Wave [ii] retraced deeper than 61% and corrected till the start of inner wave [a] of [i].

So, wave [iii] must be 100%-123% of wave [i] which would be of approximate 480-550 points from 10557 if I am right at identifying the formation of ED and inner wave [ii] of ED is really completed at 10557.

Otherwise we can see one more down leg for low below 10557 [as 3rd (abc) cycle] if this wave [ii] turns into Triple Zigzag correction. But wave (X)2 need to touch or break brown line [drawn on chart touching end of (X)1] even if correction turns into Triple Zigzag. So, a bounce towards this line, or may be towards 10740-10800 is expected in this case also.

Other Possibility: – May be the whole decline started from 10929 progressing as Complex Correction (Double Zigzag or Triple Zigzag) and Nifty needs to decline below 10417 to complete this Complex Correction. Nifty can bounce above 10929 again but after completing the correction below 10417 in this case. This is just a rare case but possible at this point of time.

Now, the charts are indicating that a Double Zigzag Correction is completed from 10893-10557 and new upside wave started from 10557. So, let’s analyze the bounce started from 10557 to find out if the bounce is progress of wave [iii] of ED or inner wave (X)2 of Triple Zigzag.

Elliott Wave Analysis of Nifty on 5 minute chart

Elliott Wave Analysis of Nifty on 5 minute chart

This is 5 minute time bar chart of Nifty covering bounce from 10557 which I am expecting as start of inner wave [iii] of ED or inner wave (X)2 of Triple Zigzag. Both these wave must be a (abc) move.

This bounce is impulsive till now and impulse may be already completed at 10708 with highly extended inner wave (v) or still in progress.

If impulse is already completed at 10708 then we can mark it as wave (a or 1). So, 38%-61% retracement for wave (b or 2) is placed at 10650-10614. Wave (v) started from 10634 is highly extended, so there is also a possibility of sharp decline towards 10634. So, overall 10634-10614 is immediate support on downside.

Overall, Nifty need to complete a (abc) move upside from 10557 minimum towards 10740-10800 or towards 10893  where first wave (a) seems completed or very near to completion and wave (b) downwards [may retrace 38%-61% of (a)] and (c) upwards is still pending. 10634-10614 is support within this pattern at this point of time.


For long/medium term,

Same as I explained in my all time frames report, Outlook for medium/long term is still bullish because Nifty is within the middle of wave (3) on largest wave cycle and there is Irregular Correction at top. Nifty has long way to go with occasional corrections (maximum 23%-38% corrections with 9918 as breakeven point and 8968 as pattern negation point. Nifty may not break below 8968 in any case in coming years before competition of larger wave cycle.  We need to revise whole wave counts if Nifty ever broke below 8968.

For Short Term,

Same as I explained in my earlier analysis reports, it is a very complex type of pattern with repeated (abc) waves at every levels. Actually it looks like a Complex Correction within Ending Diagonal Triangle, means it is a complex pattern within complex pattern which made it difficult for us to identify move with confidence.

(The learners who observed Nifty and my analysis in the month of June must have observed how Nifty behaved, how tough it was to identify Nifty move and how we managed it. Nifty was changing inner pattern every day and now the fresh picture is indicating a Complex Correction within Ending Diagonal. So, let’s see what the actual pattern will be and it will be good practical experience for learners to see and understand how the Complex Patterns forms step by step.)

Now, pattern is at a point where minimum bounce towards 10740-10800 can be expected which can extend even towards 10893. And this bounce must complete as 3 wave’s move (abc) started from 10557 where (a) seems completed or near to completion and (b) down wards and (c) upwards is pending. Nifty should not break below 10557 before completing this (abc) pattern. (Please look at the possibility shown on hourly chart).

10634-10614 is support on downside and 10614-10593 is good buying opportunity. 10557 is pattern negation point until an upside (abc) pattern completes.

We need to keep all these conditions in mind.

Trading Points of View:

According to fresh conditions on charts: –

Longs taken on Friday after staying Nifty above 10651 for 15 minutes using stoploss of 10619 was giving reasonable profit and there is possibility of minimum bounce towards 10740-10800 which can extend further towards 10893 and above. But this bounce must be a (abc) pattern with up-down-up move and wave (b) within this pattern can correct up to 61%.

So, trade must be managed systematically so that we don’t lose our gained profit if correction of 61% happens and on the other hand, we should not miss the opportunity by exiting trade early if Nifty is going straightway towards 10893 and above.

So, to manage the existing longs taken above 10651, note down Monday’s opening point and wait for 15 minutes. Nifty if trade above opening price at 9:31 AM (15 minutes after opening) then hold the longs using stoploss of day’s low (low made till 9:31 AM) and hold for next day only if Nifty closes near high of the day. Otherwise exit longs.

But if Nifty opens gap up and trades below opening price at 9:31 AM then use stoploss of 10699 (some points below Friday’s closing).

Otherwise Nifty if decline towards 10614-10593 then fresh buying can be done using stoploss of 10583 (some points below 10593) expecting targets 10740-10800 in coming day.

It is very difficult to manage trade in these types of complex patterns because of sudden up-down swings. I had explained the conditions and suggested most probable trading strategy based on my experience. Otherwise, traders can plan their own trades using their own experience based on this conditions explained above.

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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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