Elliott Wave Analysis Report of Nifty for 30 May 2016

| May 29, 2016

Nifty again opened gap up on Friday at 8081 and traded with huge strength for rest of the day. Nifty bounced more than 90 points from previous close to register day’s high 8164 before closing 87 points up at 8156.

Friday I expected Nifty to bounce till 8114 and some decline after achieving 8114. Suggested safe traders to have patience and avoid trade as more upside is possible but nifty is already 400 points up without any reasonable correction so it is not safe to buy as stoploss is very big, even 23%-38% correction will be of 100-180 points, and it is not safe to sell as there is no sign of reversal yet and we can’t calculate exact stoploss.

For very aggressive traders who can’t wait (those who demand a trading strategy every day no matter what is the market condition), suggested to buy 7800 June put intraday in minimum quantity after break above 8114 keep 50% stoploss, Put buyers may have 10-12 points loss.

Today I am showing move only after 24 May 2016 low 7715 as previous waves are not completely clear and possibilities I have explained in my previous analysis report Elliott Wave Analysis Report of Nifty for 26 May 2016.

Elliott Wave counts of nifty on 5 minutes chart

Elliott Wave counts of nifty on 5 minutes chart

This is 5 minutes time bar chart of Nifty covering move from 24 May low 7715 which looks like sharp impulsive move without even a 10% correction in between. The most probable wave counts I have marked on chart.

There are repeated upside impulsive followed by correctives at bottom which can be repeated inner waves 1s and 2s deeper till 4th degree. 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 seems this impulse is still within its bigger wave (3), and that wave (3) is in its inner wave (v), and that inner wave (v) is also within its inner 5. Please look at the chart carefully and try to understand wave counts.

Inner wave (v) of  (3) already achieved minimum 61% projection after breaking above 8122 and is extended whereas next 100% projection is placed at 8223. Nifty can give 23%-38% decline as wave (4) after completion of wave (3) at higher levels. Next expected range of completion of wave (3) is around 8223 which is 100% projection of inner wave (v) of (3).

Learners please look at every bigger as well as inner wave count on chart carefully and try to understand especially those who find it difficult to understand the concept of Elliott’s Waves Cycle.

Personality of wave (3):

“Wave 3 is always faster, steeper and longer with gaps in between and we should not try to catch the top of wave 3”. The same I have explained in my book and in the article Concept of Elliott Wave Theory Explained – Personalities of Waves. Please read carefully.

And here on above chart also, main wave (3) is started from 7117 which is still rising with gaps and without any correction. There are higher extensions and negligible correction within its inner waves, that’s the nature of wave 3.

Some of my book subscriber and learners who send me charts with their wave counts for my observations and comments sometimes mark slowest move as wave 3 even with overlapping of waves within 3. They need to understand the personality of wave 3 as it is most important wave of EWT. No matter if you are not able to identify any other pattern, just wait or leave it but you must know at least a slowest move with overlapping of waves is not wave 3 and try to adjust counts accordingly.

Let’s have a separate look at very last impulse started from 7959 which I have shown as start of inner wave  (v) of (3) on above 5 minutes chart.

Elliott Wave counts of nifty on 5 minutes chart

Elliott Wave counts of nifty on 5 minutes chart

This is again 5 minute’s time bar chart of Nifty covering move from 7959 which I have shown as start of inner wave (v) of (3) on first 5 minutes chart.

It seems inner wave 3 completed at 8135, 4 completed at 8114 (not even 23%) and 38%-61% projection for wave 5 is placed at 8181-8223 as explained on chart. If the counts I am identifying are correct then Nifty can once achieve 8181-8223 followed by small or big decline but exact levels can be calculated only once reach there.

Conclusion:

From most probable wave counts on charts, the impulse started from 7715 is still seems within its wave (3) so possibilities of higher levels are still there. Next excepted level for completion of wave 3 is around 8223 [which is 100% projection of inner wave (v) of (3) and 61% projection of inner wave 5 of (v) of (3)]where we can expect a small or big decline but exact levels can be identified only when it actually complete as there can be higher extended waves within wave 3. Minimum decline may be of 23%-38% which will be around 100-180 points from high after completion of wave 3.

For trading, though higher levels are possible but it is not safe to buy Nifty after sharp bounce of 450 points without correction as even a normal 23%-38% correction will be of 80-120 points, a very big stoploss and high risk with low reward. On the other hand we can’t sell as there is no sign of reversal yet and we can’t calculate exact stoploss.

So, either we need to wait for 23%-38% correction or confident signs of completion of impulse on higher side to initiate any fresh trade. And focus should be on selling whenever getting low risk selling opportunity.

Aggressive / risky traders who can’t wait (those who demand a trading strategy every day no matter what is the market condition) can buy Nifty June 7900 Put positional in very light quantity if get price around 8220-8250 without any stoploss expecting minimum 100-180 points fall in Nifty from highest point, and further can be books or hold after seeing latest wave’s pattern.  Trade should be in very light quantity so that you will be comfortable even if the Put become zero as there is no stoploss and no sign of reversal yet. Trading must be in options only as it is highly risky to trade in Futures without exact stoploss.

Safe traders who have patience must wait until we get the sign of reversal with exact stoploss. Learners please read the Personality of wave 3 above.

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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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