Elliott Wave Analysis and Outlook of Nifty for 23 Dec 2016

| December 22, 2016

Nifty opened gap down today at 8043 and traded with negative bias for rest of the day. Nifty declined more than 90 points to register day’s low 7964 before closing 82 points down at 7979.

Yesterday, trading strategy was “If Nifty “fails to touch 8077” and “trades below opening price at 9:31 AM” then shorts can be taken using stoploss of day’s high expecting downward target 7978 and below”. Nifty opened at 8043 and was trading at 8031 (below opening price) at 9:31 AM and then declined below 7978 without triggering stoploss. Trade setup was for 52 points profit against 15 points stoploss after conditions fulfilled at 9:31 AM. Let’s have a fresh look at latest charts for further scenario.

Today I am covering bounce from 21 Nov 2016 low 7916 to conclude short term scenario and previous wave counts are explained in my previous analysis report Elliott Wave Analysis Report of Nifty for 05 Dec 2016

Example of Irregular Correction in Progress

Example of Irregular Correction in Progress

This is 30 minutes time bar chart of Nifty covering bounce from 21 Nov 2016 low 7916. This is the same chart with explanation which I had explained in my yesterday’s report because there is no major change in wave counts on this chart.

As I explained earlier, an impulse seems completed from 7916-8250 with inner wave (1) may be completed from 7916-8055 (pattern is not clear), wave (2) may be completed from 8055-7952, wave (3) may be completed from 8055-8122, wave (4) may be completed from 8122-8066 and wave (5) may be completed from 8066-8250 as ED which projected more than 61%. Learners, please looks at the inner wave counts of ED carefully. This impulse can be wave (A or 1).

The next bounce from 8056-8274 is a three wave’s (abc) move which is indicating some sort of Irregular wave (B) of Irregular Correction completed at 8274. And if an Irregular (B) completed at 8274 then there must be wave (C) started from 8274 and wave (C) is always an impulse.

On the other hand, we generally see wave (C) to project till end of (A) which is 8056. So, this pattern was indicating a decline towards 8056 and pattern of decline must be impulse. Nifty declined well below 8056 but still there is no clear sign that an impulse is completed (started from 8274).

61%-78% retracement of wave (A or 1) (from 7916-8250) is placed at 8043-7987 which is already achieved.

And further, if I am right at identifying the pattern and it is really Irregular Correction in progress then we can see a very sharp bounce of 350-500 points after completion of this Irregular Correction between 8056-7916. We can’t ignore the possibility of this Irregular Correction pattern as long as Nifty is trading above 7916.

Read the details article explaining pattern, personality, calculations and effects of Irregular Correction at Irregular Correction of Elliott Wave Theory Explained by Deepak Kumar

Now, let’s analyze the decline from 8274 separately to see if there is any sign of impulse in progress. Any impulsive decline from 8274 will support the possibility of big Irregular Correction otherwise we need to take help smaller waves for very short term outlook and intraday trades.

Elliott Wave Counts of Nifty for 23 Dec 2016

Elliott Wave Counts of Nifty for 23 Dec 2016

This is 15 minutes time bar chart of Nifty covering decline from 9 Dec high 8274.

It seems impulse is completed from 8274-8255 which could be wave (1) followed by an irregular correction from 8155-8225 as wave (2).

Further, wave (3) may be completed from 8225-8062 which projected less than 161% thus wave (3) is not extended, wave (4) may be completed from 8062-8110 and wave (5) may be in progress from 8110.

Wave (5) projected minimum 61% after breaking below 7978 and is extended wave. If it is really an extended wave (5) of (c) then we can see a sharp 100% retracement of this whole wave (5) after its completion. (Extended wave 5 often retrace by 100% with speed, Personality o extended wave 5).

Though, wave (5) achieved its minimum Fibonacci Projections but pattern doesn’t seem completed. So, let’s have a separate look at wave (5) started from 8110 on 5 minutes chart.

Elliott Wave Counts of Nifty for 23 Dec 2016

Elliott Wave Counts of Nifty for 23 Dec 2016

This is 5 minutes time bar chart of Nifty covering decline from 8110 which I am expecting as start of wave (5) of (c) of Irregular Correction.

It seems inner waves (i), (ii), (iii) are completed and (iv) is in progress. 38% retracement of wave (iii) is placed at 8019 and same is the point above which we can think of any reversal. Otherwise if wave (iv) is already completed at 7993 then minimum 38%-61% projection for wave (v) is placed at 7937-7902.

Conclusion:

Nifty is declining gradually day by day and not giving any sign of reversal or completion of wave. But 3 wave’s (abc) bounce completed at top (from 8056-8274) is indicating possibility of an Irregular Correction which is giving the possibility of bounce above 8274 again. Possibility of this Irregular Correction pattern will be negated only if Nifty breaks below 7916.

Read the details article explaining pattern, personality, calculations and effects of Irregular Correction at Irregular Correction of Elliott Wave Theory Explained by Deepak Kumar

For Intraday/Very short term, Nifty achieved 7978 but decline from 8274-7964 is not giving any clear signs of completion of any impulse. So 8019 [(38% retracement of inner wave (iii) of (5) progressed till now] is the point above which we can think of any reversal and same must be the stoploss for existing shorts. Otherwise we can see further decline towards 7937-7902.

We need to keep all the conditions and levels of 30 minutes, 15 minutes and 5 minutes charts to prepare further trading plan.

For Trading Point of View:

Possibility of Irregular Correction on 30 minutes charts is indicating a good bounce above 8274 but decline from 8274 is not giving any clear signs of reversal. So, trade must be done using small inner waves which further can turn to positional if conditions favour. Following are the low risk trading strategies for tomorrow.

  1. Buy Nifty only if “trades above tomorrow’s opening price at 9:31 AM” and “touch 8020” (both conditions must fulfill) using stoploss of 30 points expecting minimum target 8110 which further can extend higher towards 8274. Hold for next day only if Nifty closes near high of the day. Use strict stoploss.
  1. If “Nifty first achieves 7937” and then “trade above tomorrow’s opening price at any time of the day” then buy above opening price using stoploss of 30 points for minimum target 8100 which further can extend towards 8274. Hold for next day only if Nifty closes near high of the day. Use strict stoploss.
  1. Avoid fresh Shorts as long as Nifty is trading above 7916. We will think of shorts only if it breaks below 7916 after seeing fresh pattern.

Nifty is at the positions where it can either fall sharply or bounce sharply because the decline from 8274 is either wave (c) of Irregular Correction or wave (3) in progress. So, keep strict stoploss of the trades and never over trade.

Nifty Intraday Trading Strategy based on opening price at 9:31 AM

Many of my Elliott Wave book subscribers ask about Intraday Trading Strategy I mention sometime in my analysis reports to initiate at 9:31 AM because this strategy is not mentioned in my “Elliott Wave Book”.

“Nifty if traded above opening price at 9:31 AM then buy with stoploss of low made till 9:31 AM AND Nifty if traded below opening price at 9:31 AM then sell with stoploss of high made till 9:31 AM.

I want to inform that this strategy is not based on Elliott Wave Theory but based on price action. And this strategy is part of my other book on Day Trading titled “NSE Stocks Intraday Trading Techniques”.

These trading strategies works best in trendy market and works better on stocks but can be used on index also. I use it on index when waves or not clear but I am expecting a big move on either side OR when I have targets but don’t have small stoploss and you must have observed that it works most of the time.

So at last, This trading strategy is not based on Elliott Wave Theory so I have not mentioned it in my “EW Book” but I suggest trades based on this strategy in my reports as bonus when conditions are better and waves are supporting for this strategy.

The link to details of book “NSE Stocks Intraday Trading Techniques”is http://sweeglu.com/stock-trading-strategies-ebook/.

Click Here to Learn Practical Application of Elliott Wave Theory  in real time trading/investment from the deep experience and true knowledge of Deepak Kumar .

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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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