Elliott Wave Analysis Report of Nifty for 03 Oct 2016 Onward

| October 2, 2016

Nifty opened mild lower at 8581 followed by a decline to register day’s low 8555 but bounced from lower levels and traded with positive bias for rest of the day with volatility. Finally Nifty closed 19 points up at 8611 after registering day’s high 8636.

Friday, I expected a pause or small bounce or sharp recovery towards 8800 but didn’t suggest any exact trade because bottom range based on the pattern was very big to calculate any safe and small stoploss. I just advised to avoid fresh selling as small or big recovery was expected. Let’s have a fresh look at latest charts for further scenario.

Today I am covering the move after 2016 high 8968 only as there is some confusion in the pattern of previous waves which further making it difficult to identify short term moves. We will ignore previous waves for time being and will focus on very short term pattern only.

Elliott Wave Analysis of Nifty for 03 Oct 2016

Elliott Wave Analysis of Nifty for 03 Oct 2016

This is 30 minutes time bar chart of Nifty covering decline from 8968. The first decline from 9868-8688 may be wave (A or 1) but inner waves are not convincing. Further bounce from 8688-8893 may be wave (B or 2) as Double Zigzag Correction as explained in previous reports and further wave (C or 3) may be completed at 8555. Wave (C or 3) looks completed at 8555 and projected just 100%-123%, thus not extended. So, there are two conditions on the charts: –

  1. If the wave completed from 8893-8555 is (C) then we can expect a sharp recovery towards 8800 (start of wave 5 of C) because wave (5) of (C) is highly extended. And this recovery can further extended towards new high above 8968.
  1. And if this wave completed from 8893-8555 is (3) then it is not extended (not projected 161%). And if wave (3) is not extended then next wave (5) needs to be extended (project 61%-100%) which will be 265-413 points. So, Nifty can give one more decline of minimum 256-413 points in this case. But this possibility will be negated if Nifty even touches 8689 because wave (4) can not overlap (2).

So overall, we can expect either a sharp recovery towards 8800 or a good decline of 256-413 points and 8689 is the exact point of confirmation between these two possibilities.

Now, let’s have a separate look at decline from 8893 which I am expecting as start of wave (C or 3).

Elliott Wave Analysis of Nifty for 03 Oct 2016

Elliott Wave Analysis of Nifty for 03 Oct 2016

This is 15 minutes time bar chart of Nifty covering decline from 8893 which I am expecting as start of wave (C or 3).

It seems wave (C or 3) is completed as the decline look like completion of impulse but with sharp and highly extended inner wave (5) which already extended more than 123%. Wave (4) of (C or 3) is Irregular Correction, learners please make note of it.

Now, wave (C or 3) is already retraced by 23% after breaking 8634 and next 38% retracement of wave (C or 3) is placed at 8684. So, 8684 is the point above which we can think of any reversal.

But if this wave completed from 8893-8555 is wave (C) with its inner wave (5) started from 8800 then we can expect a sharp rise towards 8800 again because inner wave (5) of (c) is highly extended (projected more than 123%) and extended wave (5) normally retraced by 100%. Same I have explained above on previous chart.

Let’s have a separate look at the bounce after low 8555 to see if it is giving any clear indication of very next move.

Elliott Wave Analysis of Nifty for 03 Oct 2016

Elliott Wave Analysis of Nifty for 03 Oct 2016

This is 1 minute time bar chart of Nifty covering bounce after Friday’s low 8555.

It seems an impulse is completed from 8555-8617 which may be wave (A or 1), decline from 8617-8565 may be wave (B or 2) and wave (C or 3) may be in progress from 8565. Wave (C or 3) already achieved normal 100%-123% projection after hitting 8627-8641 range whereas next 161% projection is placed at 8665. Wave (C or 3) is slower than wave (A or 1).

And within wave (C or 3), it seems wave 1, 2, 3 and 4 are completed and (5) may be in progress. 61%-100% projection for wave (5) of (C or 3) is placed at 8638-8666 and top of wave (3) is 8636. So, minimum 8636-8666 is expected for wave (5).

So by looking at this chart, Nifty needs to open Gap up and bounce sharply above 8666 to gain the personality of impulse otherwise consolidating below 8666 for some more time may confirm this bounce as correction and Nifty may fall further below 8555.

Points for Learners about Identifying Trades during Market Hours (Must read carefully):- 

Some time when pattern is not clear or Nifty close at a point where there are possibility of two pattern, I usually mention that any exact trade can be decided during market hours only after identifying smaller pattern on lower time frame. And students asks that how to identify small patterns during market hours. So I have analyzed whole Intraday move of Friday on 1 minutes chart counting every single wave.

Just look at the 1 minute analyzed chart above. There are number of waves I have counted on above 1 minute chart of single day and every single wave is following all the rules of EWT, same rules which I explained in my book and apply daily in my reports. And there are important points to observe practically: –

  1. Inner wave 5 of (A or 1) is highly extended and reversed almost by 100%. The same condition I have explained in my book in “Extended Waves” chapter and same I explained in my yesterday’s report too and we caught many good moves because of this rule/observation earlier.
  1. Inner wave (5) of (c) of (B or 2) is Ending Diagonal Triangle completed in just 02 hours. This ED is following all the rules and same rules are followed on all other time frame let it be 5 minutes, hourly, daily or monthly. Please read this article Ending Diagonal Triangle (ED) Pattern of Elliott Wave Theory Explained by Deepak Kumar and check if it is following all the rules or not. And if someone could have identified it during market hours then could have made minimum 50-60 points with 10-15 points stoploss because ED is always an end of Impulse.

So, if you really focus on understanding Elliott Wave Theory then there is nothing different in identifying pattern or deciding trade on lower time frame. The way I explain wave counts daily on all time frames and prepare trading strategies, same can be applied on lower time frame during market hours for confirmation of patterns, calculating small stoploss and for short term/Intraday trades.

The wave I counted on Friday’s move could be identified during market hours too but can never be known in advance, I could not explain in my Thursday report that this pattern and ED is going to happen tomorrow (Friday).

I explained in my Thursday’s report that there is possibility of a Small or Big Recovery (that is what my limitation to conclude in advance) but there was no way to know with which pattern it is going to happen. That’s why  I told that “Small or Big recovery is expected, so avoid any fresh short and can Buy if you see any small bullish pattern during market hours on lower time frame.

So, it is very important to learn Elliott Wave Theory yourself to make best use of this awesome analysing method otherwise you are going to miss many great opportunities if you depends solely on my reports because I send analysis report a day in advance and I have limitations. Though I analyze a day in advance and still I succeed in identifying market moves and deciding trades accurately most of the time. So, just think about the possibility if you use it during market hours. It will give more accuracy and refined low risk trades which we can’t identify a day in advance.

See zoomed in 1 minute chart explaining the wave counts of wave (c) of (B or 2) with Ending Diagonal Triangle below and compare try to check if it is following all the rules or not.

Example of Ending Diagonal Triangle on 1 minute chart

Example of Ending Diagonal Triangle on 1 minute chart

Conclusion:

For Medium Term, A sharp bounce towards 8800 which can extend further above 8968 or one more good decline of 256-413 points is expected in coming days and 8689 is the exact point between both the possibilities. Means even touch of 8689 will negate the possibility of decline of 246-413 points.

For short Term or Tomorrow, Nifty needs to open gap up and bounce sharply above 8666-8688 to gain the personality of impulse and move towards 8800 otherwise consolidating below 8666 for some more time may initiate fall below 8555 again.

For Trading Point of View:

Trade can be initiated after observing tomorrow’s opening and personality of the movements:  –

  1. If Nifty consolidate below 8666 for more than couple of hours then Sell Nifty will exact stoploss of 8689 expecting targets below 8555 which further can extend towards 8500.
  2. If Nifty open gap up followed by break above 8688 then Nifty can be bought with stoploss of 8657 expecting target towards 8800.

Trade in limited quantity and with strict stoploss to avoid heavy loss if we prove wrong in analysis.

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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"