Elliott Wave Analysis and Trading Strategy of Nifty for 12 July 2017 Onward

| July 11, 2017

Nifty opened higher at 9797 and bounced further to register new life time high 9830 but failed to sustain at those higher levels and declined back to register day’s low 9778 before closing 15 points up at 9786.

In my last analysis report (for 10 July), I expected a bounce above 9700 and suggested to sell Nifty at 9719 using stoploss of 9751. Nifty bounce above 9719 but stoploss of 9751 was triggered and it bounced further today to register new life time high 9830. Now, let’s have a fresh look at latest chart for further scenario.

Today I am analyzing bounce from 26 Dec 2016 low 7893 and earlier wave counts are explained in my “All time frame” analysis report Elliott Wave Analysis of Nifty using All Time Frames

Elliott wave analysis of nifty on daily chart

Elliott wave analysis of nifty on daily chart

This is daily time bar chart of Nifty covering bounce from 24 Dec 2016 low 7893.

I am not showing any wave counts on this chart because the bounce from 7893 is straight, steep and without even 23%-38% and I am not able to identify its inner waves. But this bounce is still carrying the personality of some sort of wave 3.

I added this chart just to calculate Fibonacci levels. So, 23%-38% retracement of whole move (from 7893-9830) is placed at 9372-9090. So 9372-9090 is the expected targets range if any bigger correction is started.

Otherwise, we can expect a minimum correction of 400-500 points whenever correction starts and we can identify medium term waves clearly only once correction of 400-500 points happens. But there is no way to calculate exact top at this moment of time.

The only clue we can get from this chart is that there is new upside impulse started from 9448. So, we need to concentrate on analyzing this upside impulse to calculate short term moves.

Elliott wave analysis of nifty on 15 Minute Chart

Elliott wave analysis of nifty on 15 Minute Chart

This is 15 minute time bar chart of Nifty covering bounce from 9448 which I am expecting as start of new Impulse.

It seems wave (1) completed from 9448-9502, wave (2) may be completed from 9502-9475, wave (3) may be completed from 9475-9650 and wave (4) may be completed from 9650-9643 as Irregular Correction and wave (5) may be completed from 9643-9830.

Wave (4) of this impulse is very complex type of Irregular Correction which confused earlier and next wave (5) is highly extended (projected more than 61%). So, there is possibility of sharp decline towards 9643 if it is really extended wave (5) started from 9643.

Let’s analyze progress of wave (5) [started from 9643] separately on lowest possible time frame to calculate medium term breakeven point.

Elliott wave analysis of nifty on 5 Minute Chart

Elliott wave analysis of nifty on 5 Minute Chart

This is 5 minutes time bar chart of Nifty covering bounce from 9643 which I am expecting as start of extended wave (5).

It seems wave (5) is already completed from 9643-9830 as clear impulse as marked on chart and a small or big correction has been started.

38% retracement of progress of wave (5) [from 9595-98300] is placed at 9758. So, 9758 is the point below which we can think of any medium term reversal after confirming with the pattern formed.

Now, we need to analyze the decline from high 9830 to calculate short term breakeven point, entry levels and stoploss.

Elliott wave analysis of nifty on 5 Minute Chart

Elliott wave analysis of nifty on 5 Minute Chart

This is again 5 minutes time bar chart of Nifty covering decline from all time high 9830 which I am expecting as start of small or big correction.It seems wave (1) completed from 9830-9807, wave (2) completed from 9807-9823, wave (3) completed from 9823-9778 and wave (4) may be in progress.

38% retracement of wave (3) is placed at 9795, so 9795 can be referred as breakeven point or stoploss for shorts.

Conclusion

I expected a bounce above 9700 towards 9719-9750 followed by reversal. Bounce above 9719 happened as expected but it bounced further above 9751 because of Irregular Correction formed for wave (4) or because of some other pattern which I am not able to identify at this moment.

Now, Nifty bounced about 2000 points steeply (from 7893-9830) without even 23% correction in between which is making it difficult to identify inner waves and I am unable to conclude which wave is actually going on within this bounce. We need minimum 23%-38% correction of this bounce for clarity in waves and that 23%-38% correction will be around 400-600 points. Until then, we need to concentrate on inner waves at top and short term moves only.

For short term, 9758 can be referred as breakeven point on downside below which we can expected further decline towards 9643 which further can extend towards 9372-9090. And 9795 is the breakeven point on upside, above which Nifty can bounce for new high above 9830.

So by analyzing all the conditions, Upside breakeven point 9795 can be used to short Nifty with small risk of 15-20 points and further we can manage with trailing stoploss if trade goes in our favour. And 9809 (above end of wave (1) on last 5 minute chart) can be used as initial stoploss for shorts.

Trading Point of View:

The safe trading strategy according to conditions on charts would be: –

  1. Selling Nifty if get in 9795-9807 range using exact stoploss of 9809 expecting minimum target 9758 which further can extend towards 9643-9372-9090.
  1. Nifty can bounce further above 9830 for new high but upside levels cannot be calculated at this moment.

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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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