Elliott Wave Analysis Report of Nifty for 14 Nov 2014

| November 13, 2014

Nifty opened Gap up today and decline for rest of the day with slow rises and sharp falls followed by sharp rise at the end. I represented expected move of Nifty on chart of my Yesterday’s analysis report “Nifty Chart is Suggesting New High Again – EW Analysis for 13 Nov 2014” and Nifty followed it exactly till now.  Before seeing the further progress of move let me show you full nifty move from 7724 to till date on hourly chart.

Hourly Chart of Nifty

Hourly Chart of Nifty

This is hourly time bar chart of Nifty covering move after 7724. I am not showing any counts on this chart as I am not confirmed of the counts yet. And today, I want to show how to trade and act when you are not confirm of counts on bigger picture.

If you look casually on move from 7724 to high it looks like straight move with gaps and only a single reasonable correction in between but overlapping and stretching of waves at the top.

Now, if you refer the personality of waves, overlapping of waves at top in upward slope is a sign of “Ending Diagonal Triangle” and Ending Diagonal represents the end of an impulsive wave. If it is end of impulsive wave there are only two possibilities:

  1. Either it is end of wave 3
  2. Or it is end of wave 5 (end of wave 5 is also the end of bigger wave 1, Wave’s Cycles)

In both the cases, there is expectation of correction after end of impulsive wave.  Correction will be smaller if it is end of wave 3 and correction will be bigger if it is end of wave 5 but a correction is expected in both the cases.

Now we need to see the ED like formation closely on 5 minutes time bar chart to identify its progress and to predict expected top of the wave.

Elliott Wave Analysis of Nifty for 14 Nov 2014

Elliott Wave Analysis of Nifty for 14 Nov 2014

This is 5 minutes time bar chart of Nifty covering move after 8290.

We can see overlapping of waves in this chart and probable counts are represented on charts:

  1. Wave 1 as 3 waves (abc)
  2. Wave 2 is simple correction (abc)
  3. Wave 3 as 3 waves (abc) and is about 123% of wave 1 thus, not extended.
  4. Wave 4 looks like complex correction.

We can consider the exceptional rules of alternation here:

  1. If wave 2 is simple zigzag, we can expect 4 as complex
  2. If wave 3 is not extended, we can expect wave 5 as extended.

There is no other possibility of wave counts if we explore the whole move considering personalities of waves.

Now, if our counts are correct then last wave 5 of ED can go minimum 61% projection which is at 8398 and Nifty need to break at least previous high 8415 to prevent 5th failure. 100% extension is placed at 8446. Wave 5 is also expected to be three waves move (abc)

Now take your book and refer “Personality and calculation of wave 5”, “Extended waves” and “Alternation of Extensions” to find why I expected at least 61% projection for wave 5 and why I shown 8415 and above as “Danger Zone” for correction.

The set up on this chart is also indicating volatile move and very sharp correction after completion of ED as last wave 5 of ED has to be extended (more than 61%) to prevent 5th failure. (Hope you know the nature of correction after completion of extended wave 5). And if wave 5 fails to break the high it becomes 5th Failure and Failure 5th is also a sign of big correction.

Next correction after completion of Ending Diagonal has to touch or break the lower line of ED, means minimum correction till lower line of ED is expected.

So the conclusion is,

As you seen the first blank chart is indication end of impulsive (wave 3 or 5 or A or C whatever) and you can always expect correction after completion of impulse (Refer Wave’s Cycles). And you are identifying completion of Ending Diagonal is near as wave (5) of ED is in progress.  

So, after identifying the completion of wave (5) of ED (it must be a three waves move), you can take short positions at high with small stoploss. Keep Trailing stoploss if your trade succeeds as you don’t know how much this correction will be. Progress of correction may give indication of its length later.

How I traded Nifty Today?

I bought Nifty Futures at 8354 when Nifty Spot was around 8325 with stoploss of 8304 spot. I bought because Nifty was very near to breakout levels (8304) I given on my yesterday’s Chart. 8304 was start of wave 3 and wave 4 should not break start of wave 3.  And I was also identifying “Complex Correction” type structure for wave 4 (There is always a one wave upside after correction). So, I took 20 points risk and bough Nifty with 8304 as stoploss and again managed to catch the perfect bottom.

Again as I always suggests, I booked my 50% position in 26 points profit before closing and holding rest 50% with stoploss above my cost. Means, I am safe unless Nifty opens 30 points gap down tomorrow.

Most of the traders must be scared after seeing 65 points sharp fall from 8390 to 8321 but I bought because EW pattern was suggesting me exact stoploss and I already expected that fall. That’s the best thing of Elliott wave Theory that it shows possibilities in advance and make you trade with confidence. Elliott Wave Theory only gave me courage to buy when majority is expecting big correction, let me see how this trade goes.

Practical Application of Elliott’s Wave Principles by Deepak Kumar

(The perfect tool to predict the future of Stock Market)

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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"

Comments (11)

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  1. pradeep says:

    Deepak Sir — Excellent analysis as I seen from -40 point to +48 point (approx 100 point ) rally today as per ur prediction.
    now we need to be causes any time sharp fall can be seen as per you guidance from 8420-8446

    Please correct me me if i am wrong

  2. chandru says:

    Dear Deepak,

    I bought Nifty 8500 PE @ 170 Shall i hold it or covered at market price, please advice i am in confusion. Thanks chandru.

    • Deepak Kumar says:

      Dear Chandru,

      I never advice any one to trade and I teach Elliott Wave Analysis. Your position is in 8500 that is at 135 right now which is already in discount. I am expecting a dip but Nifty Spot may show 8400 once again before dip and not yet conformed how much that dip might be. So, take your own decision by analyzing yourself. You must have stoploss if you entered a trade.

  3. PRADEEP says:

    Hi Deepak Sir .
    Can you please update Elliott wave Nifty analysis chart for 17th Nov or suggest as i am short @ 8350 PE@ 90-
    Kindly suggest.

    • Deepak Kumar says:

      Hi Pradeep,

      Thanks for taking interest in my analysis reports. I will post my Elliott Wave Analysis Report of Nifty for Monday, 17 Nov 2014 by tomorrow. Please read the report carefully but take your own decision about your position.

  4. rajiv ahuja says:

    deepak sir what do you say on mahesh ji’s analysis ?

    • Deepak Kumar says:

      Mahesh Ji’s analysis is based on some alternate Wave Theory. I can’t comment on that. Actually I am not able to understand what he is trying to say. He may have different way of counting. I respect everyone’s analysis. I am focusing on short terms only as of now as there is a liitle confusion in previous counts that may be clear soon.

    • Mahesh says:

      Deepak’s wave counts are valid. Many valid counts can co-exist at the same time. 8450 region is a resistance and nifty could turn around that point.

  5. seshu says:

    ED analysis excellent and gives confident.

  6. satish says:

    thank you