Nifty opened mild gap down at 8607 and declined gradually to register day’s low 8550 but bounced sharply from lower levels by 70 points to register day’s high 8624 before closing 3 points down at 8615.
Yesterday, trading strategy to buy Nifty with 30 points stoploss if break above 8635 and holding Nov 8900-9000 calls without stoploss taken in 8648-8593 range. Nifty again failed to touch 8635 and declined by expected 60-90 points followed by bounce. Let’s have a fresh look at latest charts for further scenario.
Today I am covering decline from yearly high 8968 whereas previous wave counts are explained in my previous analysis report Elliott Wave Updates of Nifty for 18 Oct 2016.
This is 30 minutes time bar chart of Nifty covering decline from 8968. Again I am not making any wave counts on this chart but just showing the structure of this move without calculations. This is same chart which I have explained in my yesterday’s report because there is no change in wave counts on this chart.
There is overlapping of waves within this decline which generally indicating it as some type of Corrective pattern, may be complex correction pattern. And if the pattern of decline from 8968 is actually corrective then Nifty have to register one more high above 8968 sooner or later but cannot say from where or by which pattern.
And if you look carefully at lines drawn on chart then upper line is broken (marked by circle) but price again entered below the line, which indicates that either this pattern is not “Triple Zigzag” OR it is not yet completed if it is progressing as Triple Zigzag.
Overall from this chart, high above 8968 is expected in coming day’s/weeks but we can’t conclude if from present levels or after registering a new low below 8506. So, we need to concentrate on very last bounce from 8506 to prepare further trading plans.
This is 15 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 (1 or A) because next bounce from 8570 is bigger, sharper and carrying the personality of wave (3 or C).
But further there is lack of clarity in waves, I am not able to conclude if it is wave (C) completed at 8736 or (5) completed at 8736. Wave counts for both the possibilities are explained on chart. Please read the chart carefully because these wave counts cannot be explained theoretically. We can only conclude either wave (C) or (5) completed at 8736.
And further if we look at decline from 8736 then it may be wave (A or 1) from 8736-8663, wave (B or 2) from 8663-8700 and wave (C or 3) from 8700-8550. Inner wave (v) of (C or 3) is highly extended.
Now if this whole decline from 8736-8596 is (1), (2) and (3) then wave (5) downward is still pending which can be of minimum 72-115 points. And if this decline is waves (A), (B) and (C) then Nifty can start a new impulse for 8736-8800 again.
38% retracement of wave (C or 3) is placed at 8607 which is already breached. So now, we need to look at the pattern of bounce from low 8550.
This is 5 minutes time bar chart of Nifty covering bounce from 27 Oct 2016 low 8550.
It seems wave (A or 1) completed from 8550-8608, (B or 2) completed from 8624-8577 as simple Zigzag and Wave (C or 3) is in progress from 8577. Wave (C or 3) achieved minimum 61% projection whereas 100%-123% projection is placed at 8635-8648.
And within wave (C or 3), it may be inner wave (i), (ii) and (iii) are completed. 38% retracement of whole wave (C or 3) is placed at 8606. So, if Nifty breaks below 8606 then the waves which I marked as (i), (ii) and (iii) may become (a), (b) and (c) to form Irregular Correction and Nifty can decline towards 8677-8550 again.
There is no change for medium term, conditions are suggesting a new high above 8968 sooner or later but we can’t conclude if straightway from here or after registering new high below 8506. We need to trade with proper risk management to catch this move.
For tomorrow, Nifty is positive above 8606 but if opened or break below 8606 can decline further towards 8577-8550 again which further can extend towards 8506. Nifty opening gap down or declining sharply towards 8577 followed by sharp reversal (personality of Irregular Correction) can give a good bounce of 70-110 points otherwise any consolidation can take Nifty towards 8550-8506 again.
For Trading Point of View: –
For Medium Term, 8900-9000 calls if taken in 8648-8593 range can be hold without any stoploss till further updates and Nifty have possibility to bounce towards 8968 in medium term and it can give sharp bounce any time either from present levels or after registering a low below 8506. Because, there is generally a sharp reversal after Complex Correction. But as I advised, the quantity of calls must be in the limit so that you will be comfortable with loss even if calls become zero. This trade in small quantity is just for the expectation of good bounce after completion of Complex correction because we may not be able to catch the bounce if it really happens.
For Intraday Tomorrow, Nifty if open Gap up or Gap Down but trades continuously above opening price between 9:30 AM- 9:45 AM, then Buy with stoploss of Day’s low (made till 9:31 AM) and manage trade with trailing stoploss.
This condition for trade is because, there is possibility of Irregular Correction for wave (2 or B) but I can’t say in advance if it really happens or not, but if it really happens then this condition is favorable because we often see a sharp reversal after completion of Irregular Correction. Otherwise, those who understand Elliott Wave Theory can trade by seeing the pattern.
Otherwise Nifty fails to bounce sharply in first 15-30 minutes can result in 72-115 points decline calculated from 8624. This is general condition based on the personality of waves, because we are expecting wave (C or 3) upside which known to be faster and sharper.
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