Elliott Wave Analysis Report of Nifty for 23 March 2016 – Importance of Fibonacci Calculations

| March 22, 2016

Nifty opened mild gap down at 7695 and started declining from 7711. Nifty declined about 70 points from high to register day’s low 7643 but bounced sharply from lower levels to register new day’s high 7728 before closing 10 points up at 7714.

Yesterday I expected 7741-7757 on upside in near term and 7623 was the stoploss suggested for any existing/fresh longs. Nifty declined till 7643 (very near to stoploss) with simple corrective pattern (abc), gave low risk trading opportunity and bounced more than 80 points from low, even 7757 is also possible in next sessions. Now, 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. This is the same chart with explanation which I posted in my yesterday’s report as there is no change in wave counts.

Elliott Wave Theory counts of Nifty on 15 minutes chart

Elliott Wave Theory counts of Nifty on 15 minutes chart

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

As I explained yesterday, 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 with just 23% correction in between.

The bounce from 6969 is straight with just a 23% correction in between and with unfilled gaps and most probable counts I have shown on charts. May be it is inner wave (v) of (3) is in progress from 7405.

If inner wave (iv) of (3) is completed at 7405 then wave (v) already achieved minimum 38% projection after breaking 7622 whereas 61%-70% projection is placed at 7757-8804 which may or may not be achieved.

Let’s have a look at the move after 16 March 2016 low 7504 which I have shown as start of inner wave (v) of 3.

Elliott Wave counts of Nifty for tomorrow 23 march 2016

Elliott Wave counts of Nifty for tomorrow 23 march 2016

This is 5 minutes time bar chart of Nifty covering move after 16 March 2016 low 7405 which I have shown as start of inner wave (v) of 3.

Please read the charts and whole explanation carefully….

If we look casually the it seems, wave (1) completed from 7405-7585, wave (2) completed from 7585-7479 which retraced 61%, wave (3) started from 7479-7713, wave (4) completed from 7713-7643 followed by wave (5) started from 7643.

But we can never ignore Fibonacci calculations here.  If we calculate Fibonacci projection of wave (3) then it is less than 161% (161% is placed at 7771 where as wave 3 completed at 7713), thus wave (3) is not extended. So, we can expect wave (5) as extended (more than 61%).

So, minimum 61% projection for wave (5) is placed at 7833. Means wave (5) needs to achieve 7833 minimum if the counts are right and if Nifty declined below 7643 without achieving 7833 then either wave (3) is not completed yet at 7713 or there is something else going on.

On the other hand, if we look at the pattern of wave (2) and (4) then both these corrections are of same type. Both wave (2) and (4) are simple zigzag (abc), not showing alternations. So, maybe there is something wrong in these counts.

After analyzing above conditions, there is possibility that may be wave (3) is not completed yet at 7713 and still in progress. So, let’s count wave (3) started from 7479 on separate 5 minutes chart to have a deeper look at it.

Elliott Wave counts of Nifty for tomorrow 23 march 2016

Elliott Wave counts of Nifty for tomorrow 23 march 2016

This is again 5 minutes time bar chart of Nifty covering move from 17 March 2016 low 7479 which I have shown as start of wave (3) on above 5 minutes chart.

May be wave (3) is not completed yet and it is just inner wave (iii) of (3) completed at 7713 as shown on chart, please read every inner and major counts carefully on chart. It may be inner wave (iii) completed at 7713, wave (iv) completed at 7643 followed by start of wave (v) from 7643.

Minimum 38%-61% projection for wave (v) is placed at 7732-7787. So, Nifty can first achieve 7732-7787 as wave (v) of (3) followed by 23%-38% retracement as wave (4) followed by 38%-61% bounce again as wave (5).

38% retracement of wave (3) started from 7479 is placed at 7632 which must be the stoploss for any existing/fresh longs.

Important Points for Students/Learners: 

I explained these possibilities deeply because many of my students/subscribers send me wave counts but without calculating Fibonacci Projections and retracement.

Elliott Wave Theory is not just about counting 1,2,3,4,5 and a,b,c but it is a combinations of Wave Cycles, Wave Personalities, Wave Patterns and Fibonacci Calculations. And we need to check all these 4 factors when counting waves and we must ensure that our wave counts are obeying the entire rules otherwise just wait for clarity.

Please read this report and explanation once again and try to understand how a small ignorance in Fibonacci Calculation can change the whole scenario and trap you in wrong trade.

Conclusion:

By analyzing all the conditions on charts, levels of 7757-7787 are possible in coming sessions and stoploss for any fresh/existing longs must be 7632 which is 38% retracement of wave (3) shown on 2nd 5 minutes chart. But fresh longs to be taken only if we get decline and price near to stoploss.

Possibilities are that Nifty may first achieve 7732-7787 followed by a decline of 60-120 points followed by bounce of 120-200 points.

But overall, the structure and patterns on chart is indicating a good reasonable decline in coming days. So, Nifty may give a good selling opportunity in coming days for 240-400 points but keep patience and wait for right levels and low risk opportunity.

Any trade can be initiated or managed based on above mentioned conditions using strict stoploss.

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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"