Elliott Wave Analysis Report by Deepak Kumar for All Time Frames – The Bigger Picture of Nifty

| August 10, 2014

This is first “Elliott Waves Analysis Report of Nifty” of my newsletter service starting from Monday, 11 Aug 2014 and I prepared it for my subscribers covering Long Term, Medium Term, Short Term and Very   Short Term Elliott Waves Counts and Nifty Road Map. This is bit lengthy and it needs patience to read it, but it will surely help and guide you in future and it worth reading it. This is first report, that’s why I am covering all time frames, my next report will cover latest updates only or will update if there is any change in medium term pattern.

So,   let me start with Bigger Time Frame (Long Term)

Long Term EW counts of Nifty

Long Term Analysis Report of Nifty

Long Term Analysis Report of Nifty

This is monthly time bar chart of Nifty covering period from 2002-2014.

It shows, Nifty completed a bigger wave 1 in 2008 at 6357 starting from the start and corrected more than 61% to 2253 within a year completing bigger wave 2. Whereas, bigger wave 3 is in progress from 2253.

Here you can see,

  • Bigger wave 1 completed at 6357 in 2008 with 5th within “1” as extended (2596-6357, almost 3741 points), and retraced that whole 5th within 1 year.
  • Bigger wave 2 completed from 6357-2253 in 2009 that Corrected wave 1 by more than 61%.
  • Now Bigger wave 3 is in progress (shown with green thick line upwards) which is going to be a 5 wave move. And within Bigger wave 3, lower degree wave 1 (i-3) and 2 (ii-3) are completed and 3 (iii-3) is in progress (shown by blue line). And again in wave (iii-3) only 1 and 2 are completed and 3rd in progress (shown by thin red lines).

All these counts suggests that Nifty is in most bullish face of history now. Wave 3 is always known to be faster, longer and steeper and Nifty is in wave 3 of all time frames, from higher degree to lowest degree.

So, what is the potential of upside in Nifty on longer time frame?

This chart shows, Nifty have very long way to go now, beyond your expectations. Nifty needs to complete 5 waves to complete next higher degree impulse before a crash whereas only 1 and 2 are just completed and 3rd is just started.

We roughly multiply wave 1 by 300% to imagine full 5 waves impulse, which is usually more than that. Here if I have to imagine the top of next cycle, I can imagine it roughly at 6357×3= 20,000.   

Are you surprised? It’s not a guess but what this chart suggests. Many astrologers and time analysts suggest market crash in 2016 based on previous time cycles. But, I can’t see any crash before Nifty at minimum 16000.

Yes, crash may be there if Nifty manages to rise up to at least 16,000+ till 2016. What you think is 16,000 to 20,000 possible in Nifty till 2016? If you ask me, I can’t rule out the possibilities, possibilities are always there.

Let me show you a fact: –

Just see above chart, in the mid of 2006 Nifty High was 3774 then Nifty fell to 2596. Who expected at end of 2006 that Nifty can rise from 2596 to 6357 till 2007 (almost 150% in 15-18 months) but, it happened and you are witness.  So, if we see 9000+ this year, I can’t deny that Nifty can rise 100% from new high within 2 years. Nifty already done it before and you are witness.  

And if we see fundamental factors, Modi as prime-minister expected as booster of economy, Big investors (FIIs) are putting 1000 of Crores every in market since 5118, world is taking interest in Indian Market. Possibilities are always there. And medium term and short term charts are also suggesting extreme bullishness (you will see later).

My Conclusion:

As of my EW counts, I can’t say time but I am not seeing a crash in Nifty before 16000-20000 levels. Crash I mean to say, more than 50-61% from all time high like in 2008. Any fall of 23-38% is just correction and not a crash. If Nifty fall from 10000 to 7000, it is not a crash but a correction.

But Yes, Crash may be there before 18000, if Nifty tries to make “Leading Diagonal” in next 30-50 years time frame.

Actually, I don’t bother much about longer term as I am a trader, but it’s a cause of concern for long term investors. But I keep eye on every time frame to get perfectness in my short term analysis. Because, if I have bigger picture in my mind, I can expect things at lower degrees easily.

As per charts and EWT, Bull Run just started and may be 200-400 points intraday move will be a normal thing in Nifty after 1-2 years.

That was the concern of long term; now let us see medium term counts from lowest degree 3rd wave started from 5118.

Words about Elliott’s Wave Theory 

Only Elliott Wave Theory is the method that shows you the future of stock market if you are identifying waves correctly and perfectness comes with perfect knowledge. Not only long term but Elliott Wave principles shows even hourly intraday moves of market as you can find in my daily analysis reports. EWT is one of the best tool to success in trading and investment business which is not as tough as most of the analysts says but perfect knowledge is needed. And I am applying this awesome method to analyse Indian markets since 3 years and shared my whole experience in my book “Practical Application of Elliott’s Wave Principles by Deepak Kumar

 Medium Term EW counts of Nifty

2-NLIn above daily time bar chart of Nifty, I am showing the counts from 5118, which is also the starting point of wave lowest degree wave 3 of (iii-3), (shown in long term chart).

Here I can see,

  • Wave 1 completed from 5118-6333, almost 1215 points.
  • Wave 2 completed from 6333-5933, almost 400 points, which is an irregular correction. Irregular correction is always stronger for next up move.
  • Wave 3 started from 5933, and I am going to discuss below if it is yet completed or not.

Now I am explaining lower degree counts of wave 3 started from 5933. Just try to see the counts from 5933 marked as I, ii, iii and iv.

  • Lower degree wave ‘i’ of 3 completed from 5933-6819
  • Lower degree wave ‘ii’ of 3 completed from 6819-6638, which is again Irregular Correction.
  • Lower degree wave ‘iii’ of 3 completed from 6638-7563, which is faster and steeper as wave 3 always be.
  • Lower degree wave ‘iv’ of 3 completed from 7563-7218 which is simple zig-zag. On chart, it shows end of ‘iv’ at 7118 but actual traded low was 7218 that day. 7118 was just flash low. There is always confusion as it is not covered in EWT. I am taking it as actual traded low 7218.

Now is the time seeing lower degree wave ‘v’ of 3 which started from 7218. Just try to see the wave counts of ‘v’ after 7218 marked with small red digits 1,2,3,4 and 5 followed by A and B. There are two possible conditions for wave ‘v’.

  1. First, either wave ‘v’ is completed at 7806 (marked point as 5) to complete wave 3 on above chart from 5933.
  1. 2nd, or it is just lowest degree wave 1 of ‘v’ completed from 7218-7806 and 2 of ‘v’ is in progress which is also an Irregular correction that can end anywhere between 50-70% of 1 (in 7510-7380 range).

Most of the EWT analysts believing that wave 3 is already completed and this down move from top is bigger wave 4 (counts taken from 5933). Some believes that it is wave ‘v’ in progress which is in “ending diagonal” shape.

BUT, I am seeing my 2nd possibility. I am seeing that wave 3 is not yet completed and there is long way to go for 3. It is just lowest degree wave 1 of ‘v’of big 3 completed and lowest degree waves 3, 4 and 5 of ‘v’ are yet to completed. And wave ‘v’ of 3 is going to be extended that can show targets of 8600-8800 in medium term.

Let me show my arguments for this possibility:-

If we see higher degree wave 1 completed from 5118-6333 followed by Irregular corrective wave 2 from 6333-5933 (corrected less than 38% of 1) is a sign of bigger  and extended next wave 3 that is able to extend more than 200% of 1 but, if we take end of wave 3 at 7806 from 5933. It is not even 161% of wave 1. 161% placed at 7898, 200% placed at 8363 and 238% placed at 8827. I expected here an extended wave minimum of 200%-238%, means 8363-8827 range.

If we see Nifty from the start of wave 3 in above chart i.e. from 5933 where waves are marked as I, ii, iii and iv. Here I can see, wave ‘i’ and ‘iii’ are almost equal. Wave ‘iii’ is just above 100% of ‘i’. Elliott said, when wave 3 is below 161% of 1 then we can expect next impulsive wave 5 as extended that can go up to 100% of total move from start of wave 1 to end of wave 3.

Thus total move from 0-iii (5933-7563) is 1630. If I add 1630 at the end of wave ‘iv’ (7218), it gives the targets of ‘v’ at 8848 which is also the same as 238% of bigger wave 1 in above condition.

So, my conclusion for Medium Term: –

By analyzing all above conditions, I expect it is just lowest degree wave 1 of ‘v’ completed from 7218-7809 and 2 in progress. And Nifty can bounce from 7510-7380 (expected end of wave 2 of ‘v’) to complete ‘v’ for minimum targets of 8363-8800.

Even if we assume that wave ‘v’ and bigger wave ‘3’ completed at 7809, then also Nifty needs to go above to complete bigger wave 5. Bigger wave 5 is also expected to be extended in this case, as bigger wave 3 is again short of 161% of bigger wave 1.

Overall, we are going to see higher targets in medium and bottom is just near.

Now, let me show you the lowest degree wave ‘v’ of 3 closely from 7218.

Medium Term Analysis Report of Nifty

Medium Term Analysis Report of Nifty

Here if we see wave ‘v’ closely in above chart,

  • Wave 1 completed from 7218-7433
  • Wave 2 completed from 7433-7361, corrected just 38% of 1 which is simple zig-zag correction.
  • Wave 3 completed from 7361-7700, Just short of 161% of 1, thus not extended and we can expect next 5th as extended.
  • Wave 4 completed from 7700-7442 which is “Complex Correction” and corrected wave 3 by more than 70% but didn’t overlap 2.
  • Wave 5 started from 7442-7809 which is more than 70% of total move of 0-3, thus extended as expected. Elliott observed, when there is extended 5th, you can expect next down move falling sharply till start of 5th. You can see, Nifty declined sharply after hitting 7809 to below 7480.

Thus, a whole impulse completed from 7218-7809 and ABC correction for that impulse is in progress. As I am seeing it overall wave 1 of ‘v’ of 3, I can expect next corrective wave 2 till 61% of 1 (generally I see 50-70%). 50% placed at 7510, 61% placed 7446, and 70% placed at 7390.

Now, if I see correction ABC after completion of 5 waves move from 7218-7809: –

  • Wave A completed from 7809-7480
  • Wave B completed from 7480-7837 {a,b,c  (7480-7730, 7730-7422, 7422-7837)} which is again irregular correction as B exceeds the start of A. This is bullish for next up move.
  • Wave C started downwards from 7837.

Short Term EW Counts of Nifty

Short Term Elliott Wave Analysis of Nifty

Short Term Elliott Wave Analysis of Nifty

In this 15 minutes time bar chart, from 7837 which is taken as wave ‘C’ of ABC move.

I can identify this downward C as Ending Diagonal (3-3-3-3-3) where: –

  • Internal Wave 1 completed from 7837 to 7725.
  • Wave 2 completed from 7525-7798, which is an Irregular Correction and corrected wave 2 by 61-70%.
  • Wave 3 completed from 7798-7596, which is short of 200% of A. Thus, not convincingly extended  and we can expect wave 5 as extended that can extend up to 100% of total move from 0-3 (7837-7596)
  • Wave 4 completed from 7596-7753, that overlapped wave 2 and thus formed “Ending Diagonal”.

And the entire waves are in a-b-c form and I can expect last wave 5th also as a-b-c.

Wave 5 is in progress which is expected to be a-b-c and also extended, where it seems “a” of 5 is already completed from 7753-7540, now “b” upwards and “c” downwards is pending.

Now, how can we estimate the end of “c” and 5th of bigger C? Let me try: –

First condition: As you can see in above chart, bigger wave A of correction completed from 7809-7480 (329 points) and B was irregular. So we can expect C 100%-138% of A. If I add 100% of 329 at the end of B (7837) the number comes 7508, 123% at 7430 and 138% at 7382.

2nd condition:  The total move from 0-3 (7837-7596) in wave bigger ‘C’is 241 points and conditions are in favor of 5th as extended that can go more than 100% or 123% of total move from 0-3 starting from end of wave 4. So, if I add 100% (241 points) at end of wave 4 (7752) the number comes 7510, and if I add 123% then number comes 7455, 200% comes at 7271 (possible but rare cases)

3rd condition: As I expected before This ABC correction is wave 2 for wave 1 of ‘v’ from 7218-7809 and wave 2 generally correct wave 1 by 61%. I take it 50-70%. 50% of wave 1 from 7218-7809 placed at 7513, 61% placed at 7443 and 70% placed at 7391.

4th condition and most accurate levels can be predicted after end of internal wave ‘b’ of 5th of bigger C.

Can you see, same numbers are repeating again and again in all three conditions above? The expected range for the bottom or end of C or end of this down move is 7510-7380 from all angles.  That is my way to predict levels. Many of my followers ask me how I am almost accurate with my levels, some analysts believe that I am just lucky with my levels but counts are wrong.

But I always say, there is a long story behind my counts and long calculations behind my levels.  

Now let us see only 5th wave of bigger C in 5 minutes chart to see probabilities for next session.

Elliott Wave Analysis Report of Nifty for 11 Aug 2014

5 NLThis 5 minutes time bar chart is showing only wave 5th of down leg. 5th started from 7753 which is expected to be a 3 wave’s move (abc, 5-3-5).

Here “a” seems to be completed from 7553-7540 and we can expect “b” upwards which is also expected to be a 3 move (abc, 5-3-5) followed by “c” as 5 waves move (1,2,3,4,5).  We can expect wave ‘b’ to rise till 7680-7710 again as wave 5 of last down move from 7753-7540 is highly extended. It shows next sessions are going to be highly volatile.

As I mentioned before, it is always difficult and risky to trade “Ending Diagonal” and most of inexperienced as well as experienced analysts lose money in these conditions. And Nifty is in last leg of down move before a start of bigger uptrend. So, Nifty can play many confusing games here. We need to be cautious in our trades and have to wait for perfect opportunity.  Trading in hurry can result in heavy losses in these conditions. My advice is to trade less and save money for bigger opportunity.

My Last day Trades:

 I advised my subscribers to buy Nifty (spot) at 7568 with stoploss of 7537 on Friday. I initiated this trade because 5th wave was already highly extended and there were conditions for the start of next up move. But, as it is impossible to identify wave in Gap and Nifty chart was creating confusion (marked in circle), I advised my clients to exit if Nifty hits 7547 and we exited with 20-25 points loss.   

But in end sessions, things were again turning in favor of bulls when I see Nifty crossing last reflex points of 7566, and touched 7575. I confirmed formation of wave 2 and waited for 61%-70% correction of that small 35 points up move which was around 7554-7548 and advised my clients and alerted on face book timeline to buy Nifty around 7558-7550 with initial stoploss of 7539 (now changed to 7547, Nifty should not go below 7549 now to follow pattern) for immediate targets of 7604-7625.

I am trading here for impulsive “a” of bigger “b” of 5th that can go till 7625-7640 as per present conditions. If I see the chart, Nifty looks like in the start of lowest degree wave 3, which is always steeper and faster. So, there will not be a surprise if we see Gap-Up in next session. That’s why I advised my clients to hold till next session.

My Trading Strategy:

I am long in Nifty from 7558 with stoploss of 7547 and will try to book profit in 7604-7640 range on Monday seeing the conditions. The next expected move is what I highlighted in chart by thin red lines. I am in long position for first small up move and will book profit on Monday in 7604-7640 range. 

I will avoid trading the next small corrective down move shown on chart but will try to catch next small up move again till completion of “b” and then bigger down move from “b”.  I can’t predict levels now but will update during market hours on WhatsApp if I am free.

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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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