Elliott Wave Analysis Report of Nifty for Dec 2016 Expiry Week

| December 25, 2016

Nifty opened flat at 7972 and declined further to register day’s low 7942 but bounced sharply from lower by 80 points to register day’s high 8022 before closing 6 points up at 7985.

Yesterday, trading strategy was to buy Nifty if “traders above opening price and breaks 8019” or “if achieve 7937 following by trade above opening price”. Practically conditions didn’t match as Nifty declined but wave (v) didn’t achieved minimum 38% projection at 7937. But still if someone initiated trade after break of 8019 then there must be loss of 30-35 points because of stoploss trigger. Let’s have a fresh look at latest charts for further scenario.

Today I am covering bounce from 21 Nov 2016 low 7916 to conclude short term scenario and previous wave counts are explained in my previous analysis report Elliott Wave Analysis Report of Nifty for 05 Dec 2016

Example of Irregular Correction in Progress

Example of Irregular Correction in Progress

This is 30 minutes time bar chart of Nifty covering bounce from 21 Nov 2016 low 7916. This is the same chart with explanation which I had explained in my yesterday’s report because there is no major change in wave counts on this chart.

As I explained earlier, an impulse seems completed from 7916-8250 with inner wave (1) may be completed from 7916-8055 (pattern is not clear), wave (2) may be completed from 8055-7952, wave (3) may be completed from 8055-8122, wave (4) may be completed from 8122-8066 and wave (5) may be completed from 8066-8250 as ED which projected more than 61%. Learners, please looks at the inner wave counts of ED carefully. This impulse can be wave (A or 1).

The next bounce from 8056-8274 is a three wave’s (abc) move which is indicating some sort of Irregular wave (B) of Irregular Correction completed at 8274. And if an Irregular (B) completed at 8274 then there must be wave (C) started from 8274 and wave (C) is always an impulse.

On the other hand, we generally see wave (C) to project till end of (A) which is 8056. So, this pattern was indicating a decline towards 8056 and pattern of decline must be impulse. Nifty declined well below 8056 but still there is no clear sign that an impulse is completed (started from 8274).

61%-78% retracement of wave (A or 1) (from 7916-8250) is placed at 8043-7987 which is already achieved.

And further, if I am right at identifying the pattern and it is really Irregular Correction in progress then we can see a very sharp bounce of 350-500 points after completion of this Irregular Correction between 8056-7916. We can’t ignore the possibility of this Irregular Correction pattern as long as Nifty is trading above 7916.

Read the details article explaining pattern, personality, calculations and effects of Irregular Correction at Irregular Correction of Elliott Wave Theory Explained by Deepak Kumar

Now, let’s analyze the decline from 8274 separately to see if there is any sign of impulse in progress. Any impulsive decline from 8274 will support the possibility of big Irregular Correction otherwise we need to take help smaller waves for very short term outlook and intraday trades.

Elliott Wave Analysis of Nifty for 26 Dec 16

Elliott Wave Analysis of Nifty for 26 Dec 16

This is 15 minutes time bar chart of Nifty covering decline from 9 Dec high 8274.

It seems impulse is completed from 8274-8255 which could be wave (1) followed by an irregular correction from 8155-8225 as wave (2).

Further, wave (3) may be completed from 8225-8062 which projected less than 161% thus wave (3) is not extended, wave (4) may be completed from 8062-8110 and wave (5) may be in progress from 8110.

Wave (5) already projected minimum 61% after breaking below 7978 and is extended wave. If it is really an extended wave (5) of (c) then we can see a sharp 100% retracement of this whole wave (5) after its completion. (Extended wave 5 often retrace by 100% with speed, Personality o extended wave 5).

Though, wave (5) achieved its minimum Fibonacci Projections but pattern doesn’t seem completed. So, let’s have a separate look at wave (5) started from 8110 on 5 minutes chart.

Elliott Wave Analysis of Nifty for 26 Dec 16

Elliott Wave Analysis of Nifty for 26 Dec 16

This is 5 minutes time bar chart of Nifty covering decline from 8110 which I am expecting as start of wave (5) of (c) of Irregular Correction.

It seems inner waves (i), (ii), (iii) are completed till 7956. Further if we assume wave (iv) completed at 7993 then wave (v) didn’t achieved minimum 38% projection. Minimum 38% projection for wave (v) placed at 7937 but Nifty low was 7942.

So, may be wave (iv) completed at 8022 as Irregular Correction and wave (v) is still pending. If we assume wave (iv) completed at 8022 then minimum 38%-61% projection for wave (v) is placed at 7966-7932. So, possibilities are still there for 7942-7932 once again. [wave (v) needs to completed below previous low 7942).

If we look at small decline from 8022 then 8004 is the end of small inner wave (1), so 8004 can be referred as breakeven point for smaller wave pattern.

Conclusion:

Nifty is declining gradually day by day and not giving any sign of reversal or completion of wave. But 3 wave’s (abc) bounce completed at top (from 8056-8274) is indicating possibility of an Irregular Correction which is giving the possibility of bounce above 8274 again. Possibility of this Irregular Correction pattern will be negated only if Nifty breaks below 7916.

Read the details article explaining pattern, personality, calculations and effects of Irregular Correction at Irregular Correction of Elliott Wave Theory Explained by Deepak Kumar

For Intraday/Very short term, Nifty declined till 7942 (very near to maximum limit 7916 for Irregular Correction pattern) but possibilities of good bounce are still there as long as Nifty is above 7916. Pattern still looks incomplete and a possibility of a decline till 7942-7932 range is still there before any reversal.

And 8004 can be referred as Intraday breakeven point if we look at very small decline from 8022.

So, we need to keep all the conditions and levels of 30 minutes, 15 minutes and 5 minutes charts to prepare further trading plan.

For Trading Point of View:

Possibility of Irregular Correction on 30 minutes charts is indicating a good bounce above 8274 but decline from 8274 is not giving any clear signs of reversal. On the other hand, 7916 is the last limit for validity of this Irregular Correction pattern. So, we need to take small risk to catch the opportunity if it really happens. So,

  1. Take risk of 25-30 points and buy Nifty if decline towards 7942-7932 range with exact stoploss of 7915. First target range will be 8022-8110 which further can extended above 8274. We will lose 25-30 points if Nifty breaks below 7916 and we needs to look for fresh pattern in this case.
  1. If Nifty even touch 8004 straightway from present levels the risk of 15 points can be taken to Buy Nifty at 8004 using stoploss of 7989 expecting minimum target 8110 which further can extend above 8274.

Nifty is at very crucial zone and very near to pattern negation levels. Trading becomes difficult in these conditions because of confusing moves and some stop losses may trigger while trying to catch the opportunity. So, trade with patience and strict stoploss so that you will not much if we prove wrong in analysis.

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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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