Elliott Wave Analysis of Nifty near Gujarat Election Result

| December 14, 2017

Nifty opened bit higher at 10229 but declined sharply just after opening to register day’s low 10141. Later, Nifty found support in 10150-10140 range and bounced more than 130 points from low to register day’s high 10276 before closing 59 points up at 10252.

Yesterday, overall outlook was bullish without any major weakness and 10140-10150 was suggested as good support range because two important retracements and projections were conceding in this range.

Further I suggested buying 10000 Dec Call (in the money) in 10140-10150 range using stoploss of 10119 to hold till Friday. Nifty bounce by more than 130 points from 10140 and 10000 Dec call bounced from 260 to 351 (90 points) and closed at 341. Now, let’s have a fresh look at latest chart for further scenario.

Today I am covering bounce from 28 Sep 2017 low 9687 and earlier wave counts are explained in my previous analysis report Nifty Outlook and Trading Strategy before Gujarat 2017 Election

Elliott wave counts of Nifty on 5 hourly chart

Elliott wave counts of Nifty on 5 hourly chart

This is daily time bar chart of Nifty covering bounce from low 9687 which I marked as start of new upside impulse.

There is no change in wave counts on this chart. There are confusions and low confidence in counts but casually it seems, wave (1) completed from 9786-9945, (2) completed from 9945-9881, wave (3) may be in completed from 9881-10490, wave (4) may completed at 10033 and wave (5) may be in progress.

Wave (4) retraced deeper below 38% retracement placed at 10183 which is the point of confusion. But even if it is not wave (4) then also minimum 10490 is expected on upside because the decline from 10490-10033 is corrective pattern. So, our first target is 10490 in every case and further we can calculate after reaching 10490.

Fibonacci wise, minimum 38%-61% projection for wave (5) is placed at 10339-10529 but end of wave (3) is 10490. So, 10490-10529 is the minimum target range for wave (5).

Now, let’s analyze the progress of wave (5) started from 10033 on lowest possible time frame to see if we can get any hint.

Elliott wave counts of Nifty on 5 minute chart

Elliott wave counts of Nifty on 5 minute chart

This is 15 minute time bar chart of Nifty covering bounce from 10033 which I am expecting as progress of wave (5) on 5 hour chart.

Again it seems wave (1) completed from 10033-10127, (2) completed from 10127-10101 and wave (3) may be completed at 10329 and wave (4) may be in completed from 10329-10141 and (5) may be in progress.

61% projection of wave (5) falls at 10323 which is below 10329 [end of wave (3)] and next 100% projection is placed at 10437. So, 10329-10437 is minimum target range for wave (5).

But again, wave (4) retraced deeper than 38% even retraced more than 61% which is the point of confusion. This chart is also showing same story as 5 hour chart.

The correction stared from 10329 completed at 61% retracement so there is also a possibility that wave (1) completed at 10329, (2) completed at 10141 and (3) started from 10141. Nifty needs to break above 100% projection 10437 within 2 sessions to confirm the same.

38% retracement of wave (5) or (3) is placed at 10224 which can be used as downward breakeven point and stoploss for longs.

Conclusion

Nifty found support at 10140-10150 range and bounced more than 130 points which is the first indication that corrective pattern completed at 10141 and new Impulse for 10329-10490 has been started. First upside target is 10329 and if Nifty achieved 10437 with 2 sessions then bounce can be even higher above 10490.

10224 is the fresh breakeven point on downside which can be used as stoploss for longs.

Trading Point of View:

Trading strategy must be Buying on Dips as longs as Nifty is trading above 10224 from upside targets 10329-10490 which can extend even higher if Nifty achieves 10437 within next 2 sessions.

10000 Dec Call bought today in 10140-10150 range can be hold for tomorrow using fresh stoploss of 10223 and try to book profit before tomorrow’s closing. Hold for Monday only if Nifty achieved 10437 tomorrow and hold only if you can manage the risk.

Overall Elliott Wave pattern is indicating positive outlook for Gujarat Elections result and best conclusion can be made in last hours of tomorrow closing only after seeing tomorrow’s move. So, Nifty has possibility to bounce even higher above 10490 but trade must be hedged for the protection against any big opposite reaction after Gujarat Elections result on Monday.

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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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