Elliott Wave Outlook and Trading Strategy of Nifty on Jan 2018 Expiry

| January 24, 2018

Nifty opened bit higher at 10997 registered low 10994 and traded with huge strength for rest of the day. Nifty bounced by more than 120 points to register day’s high 11094 and closed 117 points up at 11083.

Yesterday, I expected one more bounce for higher levels above all time high with 10932-10906 as immediate support on downside but with cautions at higher levels. I suggested intraday long on decline towards support range 10920-10906 with exact stoploss of 10899 for targets above all time high but Nifty bounced straightway and trade didn’t trigger.

I also suggested Intraday shorts for target 10932-10906 if Nifty trades below opening price after 9:30 AM. But Nifty traded above opening price after 9:30 AM and conditions for trade didn’t trigger. Now, let’s have a fresh look at latest charts for further scenario.

This analysis is covering bounce from low 9687 and earlier wave counts are explained in my last “All time Frame” report Elliott Wave Analysis Update of Nifty on All Time Frames as on 22 Jan 2018

Elliott wave analysis of nifty on 5 hourly chart

Elliott wave analysis of nifty on 5 hourly chart

This is 5 hour time bar chart of Nifty covering bounce from low 9687 which I marked as start of wave (v) of 3 on Daily Chart. There were two different possibilities on this chart as I was expecting either wave (5) of wave (5) started from 10033. But latest conditions are favouring wave (3) in progress from 10033.

So now it seems, wave may (1) completed from 9687-10490 (pattern is not clear), Wave (2) completed from 10490-10033 and wave (3) in progress from 10033 which already achieved minimum 123% projection after breaking above 11025 and next 161% projection is placed at 11332 which may or may not be achieved.

Within wave (3), it seems inner wave (i), (ii) is already completed and (iii) may be in progress. And within wave (iii), it seems inner wave [1], [2] is completed and [3] any be in progress.

Now, move till wave [2], 10404 is clear. So, we need to analyze the progress of wave [3] started from 10404 separately on lowest time frame chart.

Elliott wave analysis of nifty on 30 minute chart

Elliott wave analysis of nifty on 30 minute chart

This is 30 minute time bar chart of Nifty covering bounce from 10404 which I am expecting as start of wave [3] of (iii) of (3) on 5 hourly charts.

It seems inner [i], [ii], [iii], [iv] of [3] is completed and wave [v] may be in progress from 10782 as explained on chart. Though it is difficult to identify the inner waves. Wave [v] already achieved 61% projection and next 100% projection is placed at 11265 which may or may not be achieved.

I tried to mark most probable wave counts on this chart but still there is low confidence in counts because I am not able to identify inner waves confidently.

So, let’s have a separate look at progress of wave [v] started from 10782 to calculate Immediate levels for trading.

Elliott wave analysis of nifty on 15 minute chart

Elliott wave analysis of nifty on 15 minute chart

This is 15 minutes time bar chart of Nifty covering bounce from 10782 which I am expecting as start of wave [v] of [3] on 30 minutes chart.

It seems wave (1), (2) of [v] is completed and (3) may be completed at 11092 or still in progress. Inner wave of (3) are highly extended as marked on chart.

23%-38% retracement of progress of wave (3) is placed at 11015-10970. So, 11015-10970 is the immediate support on downside and 10970 is the breakeven point below which we can think of any reversal.

Why we were cautious for decline at higher levels?

Some clients want to understand why we were cautious for decline at higher levels as they missed the opportunity to catch last bounce of 200-250 points because of low confidence. So, let me explain.

Please look at 5 hourly chart carefully. Wave (3) started from 10033 and within wave (3), the bounce from 11033-10329 is wave (i) of (3) and next decline from 10329-10074 is wave (ii). Now next bounce from 10074-10552 {which I marked as inner wave [1] of (iii)} is more than 161% of (i) {larger than (i)} and next decline from 10552-10404 didn’t overlap wave (i).

So, this bounce from 10074-10552 was qualified as wave (iii) in all prospective because it was 161% of (i) and next wave (iv) didn’t overlap (i) and pattern could have completed in this case. So, I couldn’t expect bounce from 10074-10552 as inner wave [i] of (iii) earlier because inner wave [i] of (iii) larger than major wave (i) is not a normal case, it is rare case. Now, I marked it inner wave [1] after witnessing the abnormal projections. It was not an ignorance or mistake but moving with the rules in normal conditions. We always go with the normal conditions first, we don’t expect the rare conditions in advance.

And on the other hand,

Even if I warned cautions at higher levels, I didn’t suggest short and mentioned in every report that pattern is not completed yet. Even trading strategy in all the reports was “Buying on Dips” for Intraday on all the reports with entry levels and stoploss which almost worked on Monday and earlier.

Yesterday also the trading strategy was buying if get near support 10920-10906 with stoploss of 10899 for target of new high but trade didn’t trigger because Nifty bounce straightway without decline. When breakeven is 10906 then I could not suggest trade at any levels after opening because I never know if Nifty is going to open at 11000 or 10900 next day. We always enter the trade near breakeven for best Risk-Reward, I never suggest trade at any levels even if I am confident that Nifty is going to move 200-300 point. And just look at the 15 minutes chart carefully, inner wave (v) of (3) is highly extended more than 161%, I can’t predict it in advance.

At last, we were cautious because conditions were rare on the chart but still we didn’t shorts. Though we may have missed the bounce of 150-200 point but we were on right side. Many of the retail traders lost their whole capital in this rally but we are still safe, at least our capital is protected. And these type opportunities come every next day if we have capital to trade.

Conclusion

There are changes in wave counts because of abnormal projection and outlook is still positive for higher levels in coming days. Though we can’t calculate exact top but we must calculate immediate breakeven point and stoploss at every rise and every decline in support range near breakeven point can be used as buying opportunity. Trend must be assumed as bullish as long as breakeven point is safe.

Now, Immediate support on downside is 11015-10970 and 10970 is immediate breakeven point. So, any decline towards this range is buying opportunity for minimum target new life time high which can extend even higher. Any reversal can be assumed after breaking below 10970 only after confirming with the pattern.

Trading Point of View:

According to the conditions on charts: –

  1. Nifty if decline near breakeven point 10970 (probably in 11000-1070 range) then small risk can be taken by initiating longs using exact stoploss of 10967 expecting minimum target of new high in very short term. Nifty can also bounce without touching this range also, so one can plan their own trade, I mentioned a best risk reward trade.
  1. If someone wants to trade for decline towards support then note down the opening price and wait for first 15 minutes. Nifty if “trades below opening price after 9:30 AM” then light intraday shorts can be taken after 9:31 AM using exact stoploss above day’s high (high made till 9:31 AM) and hold the trade only for Intraday. Expected downward targets are 11015-10970 but closed the trade Intraday even if targets doesn’t achieve.

BANK NIFTY ANALYSIS

“Elliott Wave Analysis Reports of Bank Nifty” with “Bank Nifty Weekly Options Trading Strategies” Daily is also provided by one of my personally trained student Vinod Sharma on his website http://www.ewanalyst.com/ Links to some of his analysis Reports are: –

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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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