Elliott Wave Analysis Report of Nifty for 21 Oct 2016

| October 20, 2016

Nifty opened gap up today at 8693 and bounced straight way to register day’s high 8727 but failed to sustain at higher levels and declined back gradually to register new day’s low 8678 before closing 40 points up at 8699.

Yesterday, I mentioned 3 conditions out which “buy Nifty if open above 8687 with stoploss 8668 for minimum upside targets 8715 which further can extend towards 8764 and we needs to manage trade with trailing stoploss” worked. Nifty opened gap up above 8687 at 8693 and bounced from 8687 to 8727 and again declined back. And that’s what I have explained in my yesterday report that conditions are not good for positional trade as minimum targets are very small and it need continue supervision on waves during market hours to manage trades. Let’s have a fresh look at latest chart.

Today I am covering move from 17 Oct 2016 low 8506 whereas previous waves counts are explained in my last analysis report Elliott Wave Updates of Nifty for 18 Oct 2016.

Elliott Wave analysis of nifty for 21 Oct 2016

Elliott Wave analysis of nifty for 21 Oct 2016

This is 5 minutes time bar chart of Nifty covering bounce after 17 Oct 2016 low 8506.

The inner waves of first bounce from 8506-8594 are not clear but it can be wave (A) or (1) because next bounce from 8570 is bigger, sharper and carrying the personality of wave (C or 3).

If we look at bounce after 8570 then it looks like progress of an impulse with inner wave (i) from 8570-8596, (ii) from 8596-8587, (iii) from 8570-8698 and (iv) may be completed at 8636 and (v) may be in progress from 8638. Wave (iv) retraced more than 38%. Wave (v) of (C or 3) has already achieved 61% projection after breaking above 8715 whereas next 100% projection is placed at 8764.

And, if we look at inner wave (v) of (C or 3) started from 8637 then it seems inner waves (1) and (2) are completed and (3) in progress from 8647. And within this wave (3), innermost waves i, ii, iii and ‘iv’ may

Completed and wave ‘v’ may be in progress from 8678. And 61%-100% projection for wave ‘v’ of (3) is placed at 8727-8758.

8668 must be the stoploss for longs which is the start of inner wave ‘ii’ of (3) because wave ‘iv’ cannot overlap ‘ii’. And if nifty breaks above 8727 then stoploss for longs must be changed to 8687 which is start of inner wave (2) of (V) because wave (4) cannot overlap (2) after completion of (3).

8668 is the point below which we can think of any small or big reversals whereas 8727-8764 is the minimum upside range we can expect.

Conclusion:

As I explained yesterday, decline from all time high 8968 looks like some sort of complex correction and inner waves of this bigger complex correction are showing the signs by making confusing moves and retracing/projecting abnormally. Conditions are very difficult for any positional trade as waves are changing every next day and it needs continuous supervision on waves during market hours to manage trades.

For short term also, charts are not suggesting any reasonable move. Minimum targets for upside coming at 8727-8764 and minimum 8727 is just 28 points away whereas stoploss is 8668 which is 30 points down. And on the other hand, even if Nifty breaks straight way below 8668 then upside pattern will be incomplete so there will be possibility for high again.

“8668 must be the stoploss for longs which is the start of inner wave ‘ii’ of (3) because wave ‘iv’ cannot overlap ‘ii’. And stoploss for longs must be changed to 8687 which is start of inner wave (2) of (V) because wave (4) cannot overlap (2) after completion of (3)”.

So, overall conditions are giving indication of range bound volatility or fluctuation where it is difficult to decide a good risk reward trade in advance. Only intraday trades for small profits can be taken during market hours.

For Trading Point of View: –

Any exact trade with good risk reward cannot be decided at this moment because minimum target is very small as explained above. If someone is already holding the longs can manage trade with stoploss 8668 and 8687 as explained above for targets range 8727-8764.

Or any fresh Intraday trade can be done during market hours based on conditions explained above if getting good risk reward.

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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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