Elliott Wave Analysis Report of Nifty for 26 May 2016

| May 26, 2016

This Elliott wave analysis report of Nifty for 26 May 2016 is latest update on my previous report as most of the patterns and outlook has been changed. And this long report more targeted to my students/book subscribers rather than outlook to show the only way to conclude probabilities by checking all the rules of  EWT. This analysis report has lot to learn if a learner pays attention and try to understand with patience.

Nifty opened huge gap up today at 7811 and traded with same strength for rest of the day. Nifty bounced about 190 points from previous close without even a single correction in between and closed 186 points up at 7934.

In Yesterday’s report, I expected Nifty to achieve 7832-7852 on upside for the trade initiated at 7753 with stoploss 7722 which achieved just after opening but Nifty bounced more than our expectations and even broke previous high 7940. Most of the medium term patterns I expected in previous reports are either negated or became complex which I am going to explain below. So, let’s have a look at fresh wave counts.

Today I am showing Nifty move from 16 March 2016 low 7405. Earlier counts and expected patterns you can read in my previous analysis report Nifty Elliott Wave Outlook for May 2016 Expiry Week.

Elliott wave counts of Nifty on hourly chart

Elliott wave counts of Nifty on hourly chart

This is hourly chart of Nifty covering move after 16 Mar 2016 low 7405 which I was expecting as progress of Ending Diagonal in my previous reports but now there are repeated complexions in this pattern which I am going to explain 1 by 1. Learners, please pay attention and read carefully.

  1. If we have to take this wave started from 7405 as Ending Diagonal (ED) then we can take end of its inner wave (iii) only at 7978 rather than the next high 7992. Because if we take end of wave (iii) at highest points 7992 then line joining wave (i) and (iii) will be disturbed which is not allowed in ED. Look at the chart carefully.
  1. Now, if we take end of wave (iii) at 7978 then there is one more high 7992 after that which can only be part of next wave (iv) which is Irregular Correction as it broke above end of (iii). And later if we assume wave (iv) as Irregular Correction then we can’t take end of wave (iv) at 7678 because if we draw line joining wave (ii) and (iv) then the line is disturbed later which is not allowed in ED.
  1. We can’t take end of wave (iv) at last low 7715 because wave (iv) must complete at lowest points (below 7678).
  1. Earlier I was expecting wave (iv) of this ED progressing as Triple Zigzag but that possibility is negated which is explained on next chart.
Elliott wave counts of Nifty on hourly chart

Elliott wave counts of Nifty on hourly chart

This is again hourly time bar chart of Nifty covering move from 7978 which I was expecting as start of wave (iv) of ED progressing as Triple Zigzag. The possibility for Triple Zigzag here is negated as line joining wave X1-X2 is broken without completion of last (abc) cycle which is not allowed in Triple Zigzag. Line joining X1-X2 can be broken only after completion of Triple Zigzag correction.

Read about Triple Zigzag correction at Triple Zigzag Correction of Elliott Wave Theory Explained by Deepak Kumar

This is the reason why I sent update to Sell Nifty in 7890-7915 range with stoploss 7921 because if the pattern I was expecting earlier was correct then Nifty couldn’t break the line joining X1-X2. Line Joining X1-X2 was around 7915-7920, so stoploss was 7921 (which triggered) and there was great risk reward as targets was 7715 in case if trade proved right.

There is only one single possibility left to assume this wave started from 7405 as Ending Diagonal which is explained on next chart.

Elliott wave counts of Nifty on hourly chart

Elliott wave counts of Nifty on hourly chart

There is only one possibility left to assume this wave from 7405 as Ending Diagonal Triangle (ED) if wave (iv) is still progressing as “Double Irregular Correction” in 3-3-5 pattern with inner wave (a) from 7978-7678 as (abc), wave (b) to complete above 7992 as (abc) and then wave (c) to complete near or below 7678. Please read the chart carefully.

Read about Irregular Correction Pattern at Irregular Correction of Elliott Wave Theory Explained by Deepak Kumar

This is the possibility but it is very complex in nature. So, just keep this in mind but don’t take it seriously to use for trade. Ignore it for time being, further waves will give clarity.

Now, let’s have a separate look on move from 06 May low 7678.

Elliott wave counts of Nifty on 15 minutes chart

Elliott wave counts of Nifty on 15 minutes chart

This is 15 minutes time bar chart of Nifty covering move from 06 May 2016 low 7678. Nifty broke the previous high 7940 of this move so now this whole pattern have possibility to be (abc) with wave (a) completed from 7678-7916 as impulse, wave (b) completed from 7916-7715 as Irregular Correction and wave (c) is in progress from 7715.

100%-123% projection from wave (c) is placed at 7953-8009 which could be next important levels.

Reason for expecting this move as (abc) rather than 123 is explained on next chart. But before that look at the point I have marked a “Reflex Point” on above chart with Red line.

Reflex Point: I call start of inner wave (5) of (C) (very last impulse of correction) as Reflex Points. We generally see that inner wave (1) of next impulse (reversal)  completes above Reflex Point. And if inner wave (1) of next impulse (reversal) doesn’t break above Reflex points then we should not ignore the possibility of new low/high again.

In this fall from 7940, let it be wave (c) or (abc), the very last impulse of this move is started from 7803. So, reflex point here is 7803. Now, let’s move to next chart.

Elliott wave counts of Nifty on 15 minutes chart

Elliott wave counts of Nifty on 15 minutes chart

This is 5 minutes time bar chart of Nifty covering move from 24 May low 7715. There are 02 points of observation on this chart:

  1. There are repeated upside impulsive followed by correctives at bottom which can inner waves 1s and 2s of different degrees till 4th If these repeated impulsive and correctives are waves 1 and 2 then Nifty needs to complete waves 3, 4 and 5 for every 1 and 2. So, it is very difficult to calculate where this wave is going to end at present. We need to wait for the signals.
  1. First Inner wave (1) of this upside impulse failed to complete above Reflex Points. So, we can’t ignore the possibility of a low below 7715 again later. That’s the reason why I am expecting this impulse started from 7715 as wave (c) rather than 3 till now. Although there is possibility for a low below 7715 again but we can’t calculate upper range for reversal at this movement. So, we need to keep patience for the selling signal where we can calculate a small stoploss.

Conclusion:

All the medium term pattern I was expecting earlier are to be ignored as there is lot of complexity in the pattern as explained above. All the medium term trading strategies mentioned in earlier report are also to be ignored and we need to start with the fresh wave counts.

There is a possibility for decline below 7715 again which we can’t ignore but upper range of reversal cannot be calculated at present. Nifty can even break above 7992 before decline. So, this possibility should not be used for trading unless we see any low risk opportunity with small stoploss.

For trading point of view, I need a break of 01 day as all the medium term patterns are negated and it will take 1-2 days to identify fresh pattern convincingly. Any experienced traders with sufficient knowledge of EWT can take own trading decisions after identifying confident pattern at lowest time frame chart.

This analysis report has lot to learn. Books subscribers must read carefully and try to understand the different consequences.

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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"