This Elliott Wave analysis report of Nifty is specially prepared covering wave counts on all time frames with medium/long term outlook of Nifty and some important points useful for Elliott Wave Theory learners.
Elliott Wave Theory is a never ending wave’s cycle starts from the birth/beginning of any financial script. Nifty born in 1995 and we need to see chart covering move from 1995 for Elliott Wave theory analysis and move after 1995 can be seen only on monthly chart. So, let’s start from the beginning.
This is monthly time bar chart of Nifty covering move from 1995 which is the beginning of Nifty. It seems a bigger wave (1) completed at 6357 in 2008 followed by bigger wave (2) or (A of 2) at 2252 which retraced more than 70%.
Further it is may be inner wave (a) or (i) completed from 2252-6338, (b) or (ii) may be completed from 6338-4531 and (c) or (iii) may be in progress. Wave (c) of (iii) already achieved 100% projection after break of 8644 whereas 123% projection is placed at 9614. So there are 02 possibilities we can expect:
- Most probably, it is bigger (2) completed and wave (3) started from 2252, there is no limit for Nifty on upside in this case. Nifty can rise even above 12000-18000 continuously in long term. 6415 is the pattern negation point for the wave counts market on chart because wave [iv] of  should not overlap [i]. And this is the most probable possibility at present conditions.
- Rare Possibility, it may be wave (A) of (2) completed at 2252 and bounce from 2252 may be progress of Irregular wave (B) with inner wave (a) from 2252-6338, (b) from 6338-4531 and (c) of (B) is in progress from 4531. In this case, Nifty can decline below 6415 and even have possibility decline till 2252 again after completion of wave (B) upwards. This is the rare possibility and I have shown this possibility because many of my subscribers/students are demanding alternate wave counts supporting possibility of crash.
Many new subscribers and learners find it difficult to understand the wave counts I have marked on Monthly chart with 02 possibilities. So, I prepared 02 separate monthly charts explaining both the possibilities individually on separate charts in separate analysis report for better understanding. Link to analysis report is http://sweeglu.com/elliott-wave-analysis-of-nifty-for-long-term-bigger-picture-for-coming-years/
We should not care much about these possibilities as Nifty can take months or years to confirm the exact pattern. So we must concentrate on progressing inner waves only, inner waves will definitely show the signs when there is actual time for any bigger move.
Move till 5118 is clear which is end of inner wave  of (c or 2) and start of wave . Now, we need to look separately at progress of wave  on lowest possible time frame.
This is weekly time bar chart of Nifty covering move from 5118 which I have marked as start of wave  on monthly chart. It seems wave [i] of  completed from 5118-6417, [ii] completed from 6415-5933 and wave [iii] may be completed from 5933-9119.
But [iv] retraced more than 70% of wave [iii] which is not normal but possible. Though it is possible for wave [iv] to retrace so deep as its maximum limit is still 6415 (end of wave [i]) but it is a very rare case. On the other hand, I am not able to identify any other pattern.
So, if we assume wave [iv] already completed at 6825 then minimum 38% projection for wave [v] is placed at 8353 which is way below the top of [iii] and next 61% projection is placed at 9297. So, minimum targets for wave [v] becomes 9119 (top of wave [iii]) which further can extend towards 9297 and above (no limit for maximum upside).
I am not giving importance to long term counts because Minimum possible target for Nifty is still 9119. We can give importance to long term if minimum targets are way above previous high but here minimum target is previous high only and market has possibility to give minor decline again. Though there is no limit for maximum, but we must give importance to minimum targets only.
The wave counts till 6825 we concluded by combining Monthly and Weekly chart which is the “end of inner wave [iv] of  of (c or 3)” and “start of wave [v]”. So, we need to analyze the progress of wave [v] separately on lowest time frame chart for more clarity.
This is daily time bar chart of Nifty covering bounce after 6825 which I have marked as start of inner wave [v] on weekly chart.
I am not able to identify any confident wave counts for the bounce from 6825-8968 because there is no co-ordination between minimum Fibonacci Projections and wave patterns if I try to counts inner waves following all the rules. May be I am missing something but I need to wait for the clarity.
But the pattern formed at the end of decline from 8968 (from 8968-7893) is indicating the possibility of very complex type of “Irregular Correction” because waves formed between 7916-8274-7893 are not showing any clear Impulsive or Corrective pattern, and the pattern looks incomplete. This possibility of Irregular Correction at 7893 is warning cautions for decline below 7893 again which cannot be ignored.
Fibonacci Calculation wise,
- 38%-61% retracement of whole bounce from 6825-8698 is placed at 8149-7643 where 8149 is already achieved and 7643 is possible only if it is “Irregular Correction” formed at 7893.
- And on upside, if correction is already completed at 7893 then 38%-61% projection on upside is placed at 8711-9217. 8711 is below the previous top 8968 so 8711 is to be ignored and minimum possible range of upside is 8968-9217 in this case.
So, “7893-7643 on downside” and “8968-9217 on upside” are the possibilities for medium term and we needs to concentrate on the last bounce started from 7893 to identify the actual possibility and breakeven points between both these possibilities.
So, let’s have a careful look at bounce from 26 Dec 2016 low 7893 on lowest possible time frame to calculate medium/short term breakout level and targets.
This is hourly time bar chart of Nifty covering bounce from 26 Dec 2016 low 7893. The whole bounce from low started slowly with overlapping of waves but gained speed as progressed higher.
By looking at the structure at bottom and personality of the bounce, it seems wave (3) is completed at 8417, wave (4) may be completed at 8327 as “Irregular Complex correction” and wave (5) may be in progress from 8327. Wave (4) looks like an Irregular type of complex correction.
It is not possible to mark inner wave counts on this chart because of the lack of space and for the sake of clarity. Inner wave counts of the move are explained clearly in my earlier analysis report Elliott Wave Analysis and Outlook of Nifty for 25 Jan 2017 Expiry Day. Please read this report carefully if finding it difficult to understand the counts on this chart.
So, minimum normal 38%-61% projection for wave (5) is already achieved after break above 8526-8650 whereas next 100% projection is placed at 8851. Wave (5) entered in extended zone after breaking above 8650.
Though minimum 38%-61% projection of wave (5) is already achieved but pattern of wave (5) doesn’t seems completed and there is no sign of reversal as Nifty is still bouncing with speed and closed at high of the day.
So, we need to have a separate look at progress of wave (5) on next 15 minutes chart for short term levels and scenario.
This is 15 minutes time bar chart of Nifty covering bounce from 8327 which I am expecting as start of wave (5) on hourly chart.
It seems, inner wave (i) of (5) may be completed from 8327-8403, wave (ii) may be completed from 8403-8351 which retraced exactly 61%, and wave (iii) may be in progress from 8351. Wave (iii) may be already completed at 8672 or still in progress because Nifty is still rising with speed and gaps carrying the personality of wave (iii) without any sign of reversal.
Fibonacci Calculations wise, 23%-38% retracement of progress of wave (iii) (from 8351-8672) is placed at 8596-8549. So, 38% retracement 8549 is the point below which we can think of any reversal and same may be the stoploss for existing/positional longs. And Nifty can bounce again from 8596-8549 range if I am right at identifying the pattern.
On upside, Minimum 38%-61% projection is placed at 8698-8739. This projection I have calculated by taking initial point 8498 because I am not sure if wave (iii) is already completed at 8672 or still in progress.
Today I have analyzed all time frames of Nifty and after combining the analysis on all the time frame we can conclude that: –
For long term, Nifty is still in bullish zone indicating higher levels towards 12000-18000 in coming years with many up-down and 6415 is the negation points for this possibility. There is very rare possibility of crash even towards 4531-2250, but this possibility of crash is very rare and will give the signs when it is really going to happen. So, we should not care much about long term as it may take years to complete the cycle with many up and downs.
For Medium Term, Both the possibilities of “bounce towards 8968-9217” and “decline towards 7893-7643” are there and 8549 (30 points up/down) is the breakeven points at present conditions between both the possibilities. We can make low risk trading strategy for this move once we get price near breakeven points with confirmation of pattern.
For Trading Point of View:
- For Medium/Short Term, we can make a low risk trading strategy (hedged or with stoploss) after seeing a correction near breakeven point for decline towards 7893 or bounce towards 8968 by taking confirmation of pattern at that time. We need to wait for perfect opportunity for low risk fresh trade.
- For Short Term: Existing longs (part positions after booking part profit at 8526) can be hold with revised stoploss of 8547 and upside possible levels are 8698-8739. Hold this position unless revised stoploss triggers or until we identify the completion of wave.
- Wait for a small or big correction/corrective pattern to form to initiate any trade.
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