Elliott Wave Analysis Report of Nifty for 08 Jan 2015

| January 7, 2015

Nifty opened flat today but traded with wild range bound volatility of 90 points whole day. After opening at 8118 Nifty first bounced till 8150 followed by decline till 8065 followed by bounce till 8138 and again declined till 8087 and finally closed 25 points down at 8102. We need to see what charts are suggesting now. Let’s start with bigger picture first.

Elliott wave counts of Nifty on daily chart

Elliott wave counts of Nifty on daily chart

This is daily time bar chart of Nifty showing move after 7118 which I am expecting as progress of Ending Diagonal. Wave (4) of ED is completed at 7724 but wave (5) is not yet confirmed if it completed or still in progress. Personality of waves on chart is suggesting that only (a) of (5) is completed and (b) of 5 is in progress. I can’t say confidently if (5) of ED is completed till Nifty is trading above lower line of ED or till I see any other convincing clue. So, we need to concentrate only on latest move till we are not confirmed.

You can read detailed explanation of this Ending Diagonal at Medium Term Elliott Wave Analysis of Nifty dated 10 Dec 2014

Let us see the latest move of Nifty closely:

Elliott wave counts of Nifty on 15 minute  chart

Elliott wave counts of Nifty on 15 minute chart

This is 15 minutes time bar chart of Nifty covering move after 16 Dec low of 7963. Here,

  • Move from 7963 to 8364 looks like impulsive (5 wave’s move), so it can be taken as wave 1 or A
  • Move from 8364 to 8148 looks like corrective (abc).
  • But next move from 8148 to 8445 doesn’t carry the personalities of impulsive and it looks like “abc” move again. The same move we were expecting as wave 1,2 and 3 of next impulsive in previous reports but Nifty declined after wave 3 only and created the possibilities of “Irregular Correction).

Now, “abc” moves from 8364 to 8148 and next “abc” move from 8148 to 8445 can be taken as waves (A) and (B) of “Irregular Correction”.  And next sharp decline after 8445 can be wave (C) for the same. Sharp and steep impulsive from high 8445 is also carrying the personality of wave (C) of Irregular Correction.  Read about “Irregular Correction” in “Types of Corrections” chapter in my book “Practical Application of Elliott’s Wave Principles by Deepak Kumar.

Now, we need to see wave (C) closely of 5 minutes chart to identify if it is completed or still in progress:

Elliott wave counts of Nifty on 5 minute  chart

Elliott wave counts of Nifty on 5 minute chart

This is 5 minutes time bar chart of Nifty covering move after high 8445 which I am assuming as wave (C) of “Irregular Correction”. The first look shows that impulsive move of wave (C) is completed as waves marked by red numbers on chart. But there are also the possibilities that it is just wave (3) of (C) completed today at today’s low as shown by blue roman numbers (possible inner waves of 3.

Factor that suggests the possibilities that it is just wave (3) of (C) completed at today’s low and (4) and (5) of (C) may be pending (It is just possibility to keep in mind):

  • We generally see 1st impulse after wave (C) equals to or more than it inner wave 5. Wave 5 of (C) started from 8228 (we also call it “Reflex Point”). But first impulsive from low is only till 8138 so it may be just inner wave 1 of next impulsive or wave (a) of 4.
  • Wave (5) as per red labels is more than 61% and fall in extended category. We generally see sharp move after extended wave 5 of C that can cover whole 5th But next move after extended 5th here is normal.

So, either whole wave (C) completed at today’s low 8066 or it is just wave (3) of (C) completed. The things will be clear after seeing next move if it progress tomorrow as impulsive or corrective.

How to trade in these conditions?

As I always suggests and also mentioned in book. You must take position whenever you see an impulsive move followed by a corrective “abc” wave till 50% to 70% of previous impulse. And then use trailing stoploss on your buying position at last turning point. There were conditions today to buy Nifty around 8095 to 8087 with low as stoploss (8065) and then trail stoploss at last turning point 8087. If next wave is 3 then you will get good profits and if it is (c) then you can get part profit or can exit cost to cost. The conditions are shown in next chart.

Elliott wave counts of Nifty on 5 minute  chart

Elliott wave counts of Nifty on 5 minute chart

This is 5 minutes time bar chart showing today’s intraday move.

Here we can see an impulsive downside from 8150 to 8066 followed by another impulse from 8066 to 8138 followed by “abc” correction of 70%. You can take small risks in these conditions and carry with trailing stoploss. Sometimes there is risk in taking position at closing for Gap openings but you will succeed with experience. The risk in carrying over night position is only when there are chances of wave 3 in opposite side of your trade. But here you know, wave (3) of (C) is already completed, and later also bounce after end of wave (c) overlapped wave (a) at the end. So, risk is very less here to carry overnight position and there are possibilities for bounce.

That’s why I always advice to stop trading while you are learning. Concept of EW you can understand from my book but experience to understand behavior of waves and getting the conclusion comes practically and with time. Opportunities comes only for a while and you can catch those opportunities only when you are able to identify it yourself.

Conclusion:

There may be a start of new big impulse or upside correction for wave 4 from todays low. There are possibilities of small or big move upside for wave (c) or (3) upside. So, stoploss for any existing longs should be 8086 that can be reduced later and any fresh trade can be done during live market hours after identification of correction. Breaking below 8086 may show lower levels.

This EW analysis report of Nifty is a part of 02 months FREE service for my book subscribers

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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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  1. sudhir agrawal says:

    Sir,
    I subscribe u & ur monthly charges