Elliott Wave Analysis and Outlook of Nifty for 19 Jan 2017

| January 18, 2017

Nifty opened flat at 8403 and bounced sharply to register day’s high 8460 but failed to sustain at higher levels and declined back by more than 60 points to register day’s low 8397 before closing 19 points up at 8417.

Yesterday, same 8344 was the point below which we can think of any reversal and 8461-8490 was expected on upper side. And trading strategy was to buy on dips using stoploss 8344 and minimum targets 8461-8490. Think of selling only after break below 8344. Nifty bounced as per expectation but didn’t break previous high 8461 and declined back. Let’s have a fresh look at latest chart for further scenario.

Today I am covering bounce from 26 Dec 2016 low 7893 and earlier wave counts are explained in my previous analysis report Elliott Wave Outlook of Nifty for 11 Jan 2017 Onward.

Elliott wave counts of Nifty on 30 minutes chart

Elliott wave counts of Nifty on 30 minutes chart

This is 30 minutes time bar chart of Nifty covering bounce from 26 Dec 2016 low 7893. The whole bounce from low started slowly and gained speed as progressed higher. This is the same chart with explanation which I had explained in my last report because there is no major change in wave counts on this chart.

Same as I explained in my previous analysis reports, it may be wave (3) completed at 8183, (4) completed at 8133 as “Irregular Correction” and wave (5) may be in progress from 8133. Wave (5) already achieved 100% projection placed at 8428 and is highly extended wave (5).

23%-38%-61% retracement of this upside impulsive wave (from 7893-8461) is placed at 8326-8244-8109 respectively which is the expected range if correction already started from 8461.

Wave (5) I have marked (started from 8133) is highly extended (projected more 100%) but still there is no clear sign of reversal. This whole move from 8133-8461 needs to retrace 100% with speed if it is really extended wave (5) otherwise it may not be wave (5), rather it may be inner wave (v) of (3) as explained below in other possibility.

Other Possibility: It may also be inner wave (iii) of (3) completed at 8183 and inner wave (v) of (3) in progress from 8133 as overall bounce from low 7893 still seems faster, progressing with gap openings (personality of wave 3) and wave is already highly extended without showing sign of any correction.  So, we will let this impulse started from 8133 complete first and further will look if it was wave (v of 3) or (5).

So, let’s have a closer look at the progress of wave (5) started from 8133 for more clarity.

Elliott wave counts of Nifty on 15 minutes chart

Elliott wave counts of Nifty on 15 minutes chart

This is 15 minutes time bar chart of Nifty covering move from 02 Jan 2017 low 8133 which I am expecting as start of wave (5). This is again the same chart with explanation which I had explained in my previous reports because there is no major change in wave counts on this chart. As I explained in my yesterday’s report,

The first bounce from 8133-8219 with overlapping of waves looks like “Leading Diagonal Triangle” (LD) and I had explained this whole pattern in details in my earlier analysis report Elliott Wave Outlook of Nifty After Break Above 8274 – Example of Leading Diagonal

It seems wave (i) completed from 8133-8219 as Leading Diagonal, (ii) completed from 8219-8181 and (iii) completed from 8181-8306 (not extended), wave (iv) completed from 8303-8227 (retraced more than normal 38%) and wave (v) may be progress from 8227.

Wave (v) projected more than 123% and is highly extended but 03 sessions already passed and we have not seen any sharp retracement, Nifty is still consolidating at top after highly extended wave (v).  This condition is creating doubt that may be we are wrong in making counts and it is not wave (v) of (5).

100% retracement of extended wave 5 with speed: We often see 100% retracement of extended wave 5 with speed (personality of wave 5). But this condition is applicable only on main wave (5), (v or 5), (5 of A) and (5 of C). But this condition is not applicable on inner wave (v) of bigger (3) because wave (3) is known for speed, length and gaps. Wave (3) is known for larger projections and smaller correction and there is no limit for extensions within wave (3).

And if we look at inner waves of wave (V) started from 8133,

Wave is still progressing with speed and gaps carrying the personality of wave 3 and very last bounce at top from 8382-8461 looks like 3 waves (abc) move. This (abc) wave at top is indicating the possibility of “Irregular Correction” at top and new high above 8461.

So, it may be inner wave (3) of (V) completed at 8417, (4) may be completed at 8373 as Irregular Correction and (5) of (V) may be progress from 8373.

Minimum 38%-61% projection of the move from 8227-8417 is placed at 8445-8490 when calculated from 8373 and high of previous wave is 8461. So, we can expect minimum 8461-8490 if there is really an Irregular Correction at top. Nifty bounced till 8460 but didn’t break 8461, so 8461 is still expected in this case.

Let me show you the other possibility on same chart as highly extended wave (v) of (5) followed by consolidation at top is creating doubts.

Elliott wave counts of Nifty on 30 minutes chart

Elliott wave counts of Nifty on 30 minutes chart

This is again 30 minutes time bar chart of Nifty covering move from 02 Jan 2017 low 8133 which I am expecting as start of wave (5). There is other possibility on same chart as I have shown: –

May be wave (i) and (ii) are completed till 8181 and wave (iii) still in progress from 8181. And within wave (iii), inner waves (1), (2) and (3) are completed and (4) or (5) may be in progress. These counts are also following all the rules of EWT but only confusion is that inner wave (1) of (iii) is larger than (i) without overlapping.

In this case also, 38% retracement of wave (3) of (iii) is placed at 8344 and minimum 38%-61%projection for wave (5) is placed at 8463-8518.

There is consolidation at top after a sharp bounce, this consolidation may be a progress of Ending Diagonal or Complex Correction. So, 8461 is still expected as long as Nifty is trading above 8344.

Conclusion:

After having a careful look at all the chart, there is no major change in Nifty outlook at present point but there is bit confusion in wave counts because of more than normal extensions. There is no clear sign of reversal yet and possibility of a high above 8461 is still there.

For short term/Tomorrow, Nifty bounced till 8460 but didn’t break previous high 8461. And expected pattern needs to complete above 8461 as long as Nifty is trading above 8344. So, 8461 is still possible and think of any reversal only if Nifty breaks below 8344 after taking confirmation from pattern formed at that time.

For Trading Point of View:

There is bit confusion in wave counts because of more than higher extension of waves as explained above twice on the same chart. So, wait for 38% retracement 8344 to plan any shorts. And trading strategy is still buying on dips as long as Nifty is trading above 8344 and unless Nifty breaks above previous high 8461. Minimum upside expected range is 8461-8490 which further can extend towards 8518.

Exact Intraday trade with small stoploss cannot be decided at this moment because of complex inner waves.

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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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