Elliott Wave Analysis Report of Nifty for 14 March 2016

| March 13, 2016

Nifty opened flat at 7484 and bounced to register day’s high 7544 but failed to sustain at higher levels and declined sharply by 80 points from high to register day’s low 7460. Nifty bounced again from 7460 by 60 points before closing 24 points up at 7510. Overall it was again a volatile days with up-down-up swings.

Our Intraday stoploss for sell 7511 was triggered within 15 minutes after opening which may have caused 10-20 points loss if someone traded. Positional hedge trade (Nifty April Future Sell and 8000 April Call buy in 1:8) is still in hold. Let’s have fresh look at latest charts.

Today I am showing Nifty move from 29 Feb 2016 low 6825. Earlier counts you can read in my previous analysis report Elliott Wave Outlook of Nifty for Budget Day 29 Feb 2016 Onward.

Elliott Wave analysis of nifty for 14 March 16

Elliott Wave analysis of nifty for 14 March 16

This is 15 minute time bar chart of Nifty covering move from 29 Feb 2016 low 6825.

There is no change in wave counts on this chart, as it seems wave (1) completed from 6825-7094 and wave (2) completed from 7094-6969 then wave (3) started from 6969. Wave (3) started slow but extended sharply later without even 23% correction in between.

The bounce from 6969 is straight without even a 23% correction in between and with unfilled gaps. So, it is bit difficult to identify waves but most probable counts I have shown on charts. May be it is inner wave (v) of (3) is in progress, but there is lack of confidence.

If it is wave (v) of (3) started from 7424 then 38%-61% projection for wave (v) is placed at 7628-7755 and wave (v) needs to achieve minimum 7628.

Nifty is consolidating in 7440-7540 range from last 5 sessions after a straight bounce of 700 points. And wave is getting slower and slower at top indicating a big move either side soon. The pattern at top with overlapping of waves can be either inner wave 1 and 2 of (v) with wave 2 as Irregular Correction or wave (v) may be in progress as ED. Both these conditions are explained separately below.

So, we need to look at move after 08 March 2016 low 7424 which I have shown as start of inner wave (v) of (3) on above 15 minutes chart.

Elliott Wave analysis of nifty for 14 March 16

Elliott Wave analysis of nifty for 14 March 16

It is 5 minutes time bar chart of Nifty covering move after 08 March 2016 low 7424 which I have shown as start of inner wave (v) of (3) on above 15 minutes chart.

It may be inner wave (1) of (v) completed from 7424-7539 followed by wave (2) from 7539-7448 as “Irregular Correction”. Next wave (3) needs to project minimum 100%-161% from 7460 which will be 120-200 points. And Nifty should not break below 7483 in to keep this pattern intact; break below 7483 will negate this pattern.

This pattern also look like an “Ending Diagonal” in progress for wave (v) and some of my subscribers also sent me charts showing it as ED. It may be ED but let me show some important observation you must keep in mind while assuming it as Ending Diagonal Confidently. Please read the chart and explanation carefully.

Identifying Ending Diagonal (ED) pattern of Elliott Wave Theory

Identifying Ending Diagonal (ED) pattern of Elliott Wave Theory

It is the same 5 minutes time bar chart of Nifty covering move after 08 March 2016 low 7424 which I have shown as start of inner wave (v) of (3) on above 15 minutes chart.

Some of my subscribers/students are marking it as ED as I have shown on above chart. Please read carefully: –

  1. Wave (1) from 7424-7539 as (abc)
  2. Wave (2) from 7539-7448 as (abc)
  3. Wave (3) from 7448-7543 as (abc)
  4. Wave (4) from 7543-7460 as (abc)
  5. Wave (5) start from 7460 and to complete above 7543 as (abc)

This pattern seems prefect by casual look but let’s see the observations:

  1. Wave (1) of this ED from 7424-7539 is not convincingly a (abc). I have marked it as (abc) but it is not confident if you market inner wave counts of (a) and (c). There is bit doubt.
  1. Wave (3) of this ED is shorter than (1) (or below 100% projection). 100% projection of wave (1) is placed at 7563 but wave (3) completed at 7543. Wave (3) shorter than wave (1) is possible in ED but wave (3) can never be shorter than both wave (1) and (5). Rule is that, “Wave (3) can never be shortest wave”. So now, wave (5) must be less than wave (3) to meet the rules. 100% of wave (3) is placed at 7556, so wave (5) should not break above 7556 now, even upper line joining wave (1) and (3) is also around 7556 which should not be breached to keep this pattern.
  1. Both wave (2) and (4) are Simple Zigzag Correction, not showing alternation. It again raises a mild doubt.
  1. As we are assuming this ED at inner wave (v) of (3), but minimum 38% projection for wave (v) is placed at 7628 (see first 15 minutes chart) whereas this ED must complete below 7556 as calculated above. So, 7556 is far below than minimum 38% projection (7628) of wave (v), again a point of confusion.

This pattern may be possible in some other way or it may be something else but we should not ignore the basic rules while assuming a pattern. Identifying a right pattern is not important but most important is to be aware of every possibility where we can go wrong.

Learners please try to understand the points; I explained it separately because I got more than 10 charts from different subscribers showing the same.  This pattern is possible, even anything is possible but we should not ignore the possibilities where we can go wrong.

Conclusion:

Most Probably, Nifty can achieve 7628-7755 on upside otherwise a good move of 150-200 points either side (up or down) is possible very soon. And stoploss for any longs must be 7481 now, whereas immediate stoploss for shorts must be 7557.

And for trading prospective, positional hedge trade suggested earlier (1 lot Nifty April Future Sell with Buying 8 Lots April 8000 Call, Nifty April Future Sell with buying 8000 April Calls in ratio of 1:8) can be hold which is in 25-30 points loss at present. Trade is in loss because Nifty didn’t move in last 5 sessions as Profit in this trade will be seen only when Nifty moves above 7600 or below 7400 soon. Start booking/protecting profit when Nifty move in 7600-7700 or 7400-7300 range which is expected soon otherwise we need to repair or exit this trade if Nifty failed to break 7400-7600 range next week.

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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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