Elliott Wave Analysis of Nifty for 04 Feb 2019

| February 2, 2019

Nifty opened higher at 10851 and bounced further to register day’s high 10983 but declined back sharply by about 170 points to register day’s low 10813 and closed 62 points up at 10893.

Yesterday, Nifty was in positive zone with 10784-10752 as immediate support and bounce towards 10923-10987 was possible. Any downside reversal was expected after break below 10752 only.

I didn’t suggest any trade and preferred to wait for 23%-38% retracement to decide further trade. Nifty bounced further to register day’s high 10983. Now, let’s have 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 Nifty for 04 Feb 2019

Elliott wave analysis of Nifty for 04 Feb 2019

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. There is no change in wave counts on this chart.

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.

Point of Cautions: – The reversal after completion of Irregular Correction is known to be sharp but the bounce after 10004 is slower when compared to the speed of wave (c) of Irregular Correction. So, we need to be cautious for one more low below 10004.

Now, let’s analyse the bounce started from 10004 separately to calculate internal moves.

Elliott wave analysis of Nifty for 04 Feb 2019

Elliott wave analysis of Nifty for 04 Feb 2019

This is 5 hourly 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 a (ABC) wave completed from 10004-10985 with wave (A) completed from 10004-10645, wave (B) completed from 10645-10333 as Irregular Correction, and wave (C) may be completed from 10333-10985. Wave (C) achieved 100% projection.

From high 10985, the Impulse completed from 10985-10534 can be marked as wave (A or 1). Further upside impulse from 10534-10923 can be marked as wave [A or 1], Irregular correction from 10923-10583 can be marked as wave [B or 2] and wave [C or 3] may be in progress from 10583.

Normal 100%-123% projection for wave [C or 3] is placed at 10972-11063 and it already entered in this range.

Now, we need to analyse the progress of wave [C or 3] separately on lowest possible time frame to check its pattern.

Elliott wave analysis of Nifty for 04 Feb 2019

Elliott wave analysis of Nifty for 04 Feb 2019

This is 5 minute time bar chart of Nifty covering bounce after 10583 which I marked as start of wave [C or 3] on 5 hourly chart.

It seems inner wave (1) completed from 10583-10710, wave (2) may be completed from 10710-10613 and wave (3) may be completed from 10613-10893 and wave (4) or (5) may be in progress.

(Wave (4) retraced by more than 38% but the pattern of retracement is Impulse, there is conflict between pattern and retracement so we can’t say confidentially if wave (4) is completed or not).

38% retracement of wave (3) is placed at 10841 which is already broken. And 61% retracement of this whole bounce is placed at 10735 (in case impulse is already completed at 10983).

The decline from 10983-10813 looks impulsive and 61%-78% retracement of this impulse is placed at 10918-10946. So, 10918-10946 is mild resistance and the area where we need to observe the pattern to calculate next course of Nifty.

Conclusion

For Medium/Long Term: – Overall longs term pattern of Nifty is at a point where it needs to bounce sharply without any break and bounce must be of 900-1500 from here. The same bounce we were expecting a month before but Nifty is not moving upward as expected, the personality of bounce is not matching with the pattern which is the point of caution.

So, this delay in bounce is indicating a possibility of very complex type of Double Irregular Correction at top and warning cautions for decline towards 10333 again before any further bounce. The possibility of a decline is just a caution because speed of bounce is not matching with the personality of pattern.

Nifty if fails to bounce sharply from here then it can follow the path as explained on chart below. But this will be valid only if Nifty enters in 10987-11063 range and decline. Another condition will form if Nifty declines without breaking higher above 10987.

Elliott wave analysis of Nifty for 04 Feb 2019

Elliott wave analysis of Nifty for 04 Feb 2019

So overall, Nifty needs to bounce very sharply without any break if it has to bounce, otherwise personality of move is warning cautions for decline towards 10333 again if it enters in 10987-11063 range but fails to break above 11063. And pattern will take another shape if Nifty decline without breaking above 10987. There are multiple conditions on higher time frame, so we need to concentre on internal patterns on small time frame until we get clarity of exact pattern.

For short term: – Nifty broke downside breakeven point 10841 but pattern of decline is Impulsive which is creating conflicts between pattern and retracement.

Now, 10918-10946 is immediate resistance and we need to observe the pattern in this resistance range. Nifty can decline towards 10813-10735 range if completes corrective pattern near 10918-10946. Otherwise 10987-11063 is next resistance after 10918-10946.

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

Trading Points of View:

The pattern on 5 hourly chart (medium term) is very complex and there are conflicts between pattern and Fibonacci retracement on 5 minute chart (very short term). So, it is not safe to plan any advance Positional or Intraday trade.

Selling can be done if Nifty completes corrective pattern in 10918-10946 range for targets 10813-10735 but this trade needs conformation from pattern during market hours. So, traders who understand Elliott wave theory can plan their trade if get confirmation, those who don’t understand Elliott Wave Theory must avoid it.

Nifty if break the resistance 10918-10946 then 10987-11063 is next resistance to observe the pattern.

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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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