Elliott Wave Analysis Report of Nifty for 18 Nov 2014

| November 17, 2014

Nifty opened mild negative today and declined slowly in first two hour of trade. Nifty declined gradually till 8350 and turned most of the technical indicators, analysts and traders negative but bounced sharply in last 90 minutes of trade to hit stop losses and scare sellers. Nifty broke new high that I was expecting from last 2 sessions also entered in the selling range of 8415-8446 I mentioned in yesterday’s report.

Elliott Wave Analysis of Nifty Chart

Elliott Wave Analysis of Nifty Chart

My new subscribers still asks me how to take entry and where to place stoploss. Today I given live call on my Facebook time line with analyzed chart and I am going to explain how and why I given that Buy call with small stoploss. Let me show you the chart I posted on my Facebook timeline today.

This is 5 minutes time bar chart of Nifty covering last 2-3 days of move. And this is the chart I posted on my Facebook time line with buy cal but I plotted so many line and boxes on it to make you understand how I used Elliott Wave Principles for buying decision. Don’t be confused with so many presentations, just read what I explained everything step by step.  I explained it with all details and also used color codes to make you understand easier. Please read it several time if you are not able to understand in first attempt.  There is nothing new in it.

I posted two updates on my Facebook timeline today:

  1.  I would like to buy Nifty on dips with 8321 spot as strict stoploss.
  2. Take 7-8 point risk, Buy Nifty in 8356-8353 range with 8348.7 as strict stoploss for targets 8380, 8407, 8415.

And let me explain why I was so confident about buy call:

“This explanation is only for subscribers who bought my book at least a week before and understand EWT basics now. New subscribers please read book and try to understand basics first and keep this report only for further reference. This explanation may be confusing for just new subscribers. “

  1. Just concentrate on 1st move from point (A) to (A) on chart that I assumed (abc) correction in yesterday’s report. It is 3 waves move and 3 waves move is always a correction.
  2. Now concentrate on move from (A) to (B) on chart marked in RED BOX. This move completed only 3 waves upwards and falls back. If you know the basic rules of Elliott Wave Theory, 3 waves down followed by 3 waves upward only allowed in “Flat Correction” and “Irregular Correction”. Here (B) exceeds the start of wave (A), formed an Irregular Correction. And there is always a one impulsive more after an “Irregular Correction”. Just read chapter “Types of Corrections” again. Now after Irregular (B) at top there must be a (C) downwards that can go till or below (A) again before next upside.
  3. Now concentrate on move from top point (B) to today’s low (C) I marked in two separate boxes Brown and Blue. Wave (C) is always a clean impulse (5 waves move). And I could identify 5 waves in move from (B) to (C) marked as small red digits 1,2,3,4 and 5 (you need to see carefully).
  4. Even if there arise doubt that move from top (B) to (C) could be wave 1, 2 and 3 instead of full impulse at it look two waves in general, 1st marked in brown box and 2nd market in Blue box. As we know the personality of waves, wave 3 must be faster and steeper than wave 1 but here 2nd fall was slower than 1st. Thus, eliminated the possibility of wave 1,2 and 3. This condition also made me more confident that it is just wave (C) of “Irregular Correction”.

All these conditions were favoring that it is just correction and there is a possibility of next upside impulse after completion of this correction and I was also expecting new high in my previous analysis reports to complete wave 5 of ED. So I just updated on my Facebook timeline that “I would like to buy Nifty on dips with 8321 spot as strict stoploss” and was waiting for confirmation and upside trigger. I will tell you later why I said 8321 as strict stoploss.

After some time I identified a formation of upside Leading Diagonal Triangle after low. And Wow! Leading Diagonal is always a wave 1 (start of impulsive) and that LD was of 18 points from low 8349 to 8367. I explained about identification and importance of Leading Diagonal in “Diagonal Triangle” and “My Observations” Chapters. It made me more confident for buying and I decided to buy on 50% to 70% correction with 7-8 points stoploss. And I posted on my timeline “Take 7-8 point risk, Buy Nifty in 8356-8353 range with 8348.7 as strict stoploss for targets 8380, 8407, 8415”.

I placed stoploss at 8348.7 because Leading Diagonal was started from 8349 and LD is always a wave 1. And next wave 2 should not break below the start of wave 1. This is the beauty of Elliott Wave Analysis that there is no confusion of Stoploss (Sustain below, Close below or Break below). You get exact stoploss and can trade with confidence.  And Elliott Wave Principles only helps you to find exact tops and bottom. I gave buy call when most of the sentiments were negative, but wave’s principles guided me and gave confidence.

And see we took 10 points risk and Nifty bounced 90 points after that. A great risk reward.

Please take time to read this explanation and try to understand; no matter if it takes hour or two. There was nothing new in it. I just followed simple rules:

  1. Corrections have always 3 waves or combination of 3 waves.
  2. Wave (B) exceeds above start of wave (A) in Irregular Corrections.
  3. Leading Diagonal is always wave 1
  4. Wave 2 can never break below the start of wave 1.

You will find these rules anywhere and most of the traders know these rules. But you need to do bit extra reasoning to find and eliminate probabilities using these rules if you want to get benefit of EWT.  I explained it in more than 800 words but it took me only 2-5 minutes to identify it. Practice makes man perfect.

It was the learning part, let proceed towards further probabilities now:

Let us see the progress of Ending Diagonal First:

Elliott Wave Analysis of Nifty Chart

Elliott Wave Analysis of Nifty Chart

This is 15 minutes time bar chart of Nifty showing move after 8290 I am assuming as progress of Ending Diagonal. Nothing has changed and Nifty is going as per expectation except wave (b) of (5) became Irregular Correction. I expected wave (5) as (abc) and now it took the shape of (abc) and also break above previous high and also entered in my selling range 8415-8446.

Let us see wave (5) of Ending Diagonal Closely:

Elliott Wave Analysis of Nifty Chart

Elliott Wave Analysis of Nifty Chart

This is 5 minutes time bar chart of Nifty covering on progress of wave (5) of ED started from 8321. In this 3 waves (ABC) move, wave (B) goes “Irregular Correction”. I marked inner waves of this “Irregular Correction” here and you can read chapter “Types of Corrections” to understand it better. I mentioned about 8321 stoploss above, my first stoploss was 8321 because wave (5) was started from 8321 and Nifty could not breach it before completion of (5).

Wave (C) projected more than 123% od (A) till now and 138% placed at 8442.

Let us see the progress of wave (C) of (5) of Ending Diagonal closely to find if it completed or not:

Elliott Wave Analysis of Nifty Chart

Elliott Wave Analysis of Nifty Chart

This is again 5 minutes time bar chart of Nifty showing intraday move only.

Wave (1) of (C) was Leading Diagonal as I mentioned above. You saw a sharp and big move after Leading Diagonal which is natural and LD is known for that.  Inner waves of (C) were difficult to identify because of steepness but I tried to count. This possible count shows that wave (C) is already completed at 8438 and there may be a minimum 70-100 point’s sharp correction tomorrow.

Even if I am wrong in counting and (C) is not completed yet, top of (C) is near as bigger wave (5) of ED already entered in highly extended zone.

Conclusion:

Nifty is already in Danger Zone for short term correction. We must avoid fresh buying and can initiate shorts with strict stoploss after confirmation. Never trade heavily, never be overconfident and never trade without stoploss. I am Human and I can make mistakes in identifying.

If you remembered,

I mentioned some days back that wave 5 is often confusing and hits stop losses of many weak traders. Also mentioned that wave 5 never gives east chance to sell or by at top or bottom. I also mentioned that Nifty may not fall till majority is expecting it. Now today’s sharp upside move scared many sellers and turned most of the traders and analysts bullish. May be you see some correction now.

Always Remember, Market always go against the majority. Always try to find something positive in negative sentiments and something negative in positive sentiments.

Elliott Wave Theory indicates these conditions in advance if you manage to understand personalities of waves.

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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 (5)

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  1. Mahesh says:

    I am still holding longs with SL @ 8347. Tomorrow again I shall create aggressive longs with the said SL in Future and Dec month options. I am sensing a LD.

  2. ashok bhide says:

    I have started watching your writings just 4 days back. appreciated but to my disappointment from 19 nov not able to see any updates on your website sweeglu.com.
    hope everything is well. any reasons for no updates if any .

  3. a kumar says:

    Now wave 5 will complete at 8500 future or wave 5 future at 8460. We can sell with sl 8530 future target 8350
    Current month option less chance to achive 90 lavel

  4. PRADEEP says:

    Just 1 world fantastic Deepak Sri.
    as I have already but 8350 PE @ 90 and waiting for good rewards
    Please suggest the pe target