Elliott Wave Outlook of Nifty for 11 Jan 2017 Onward

| January 10, 2017

Nifty opened gap up at 8262 but again traded in very narrow range of 30 points for whole day. Nifty closed 52 points up at 8288 after registering day’s low 8262 and high 8293, overall it was a dull session after gap up opening.

Yesterday, again 8219 was the breakeven point and buying on dips was trading strategy with exact stoploss of 8218 for minimum upside targets 8306-8333. Nifty again traded range bound without hitting stoploss or target. Let’s have a fresh look at latest charts for further scenario.

Today I am covering declining from 10 Nov 2016 high 8598 and earlier wave counts are explained in my previous analysis report Further Elliott Wave Updates of Nifty after Break Below 7916.

Elliott wave counts of Nifty on Hourly chart

Elliott wave counts of Nifty on Hourly chart

This is hourly time bar chart of Nifty covering decline from 10 Nov 2016 high 8598 which I have marked as start of wave (C) on daily chart in my earlier analysis report of 27 Dec 2016. This is the same chart with explanation which I had explained in my last report because there is no major change in wave counts on this chart.

As I explained in my last report, it seems an impulse is completed from 8598-7893 with sharper wave 1 and 3 followed by normal wave 5 (less than 61%) and Nifty also bounced sharply from lower levels. This impulse I am expecting as some sort of wave (C). I am not able to identify exact pattern of wave (4) but it can be Double Zigzag if it is really wave (4).

38%-61% retracement of this impulse is placed at 8162-8328 whereas 38% retracement at 8162 is already achieved. And Nifty also breached expected 8274 and next 61% retracement is 8328.

Some subscribers were asking if there is possibility of any pattern indicating low below 7893 again. Below is the possibility explained on same hourly chart which can taken Nifty below 7893 again.

Elliott wave counts of Nifty on Hourly chart

Elliott wave counts of Nifty on Hourly chart

This is again the same hourly chart of Nifty explaining the possibility of very complex type of “Irregular Correction” where both waves (B) and inner wave (b) of (B) are irregular.

Please look carefully at the counts marked on chart. A decline below 7893 is possible only if there is formation of Irregular Correction at bottom with: –

  1. Inner wave (A) completed from 7916-8250.
  2. Irregular wave (B) completed from 8250-7893 where inner wave (b) of (B) is also irregular.
  3. Wave (C) may be in progress from 7893.

Nifty can fall sharply below 7893 in this case after completion of wave (C) upwards.

This is just the possibility I had shown because subscriber were asking about it, otherwise we need to analyze the bounce from 26 Dec 2016 low 7893 on separate lowest possible time frame chart for short term scenario.

Elliott wave counts of Nifty on 30 minute chart

Elliott wave counts of Nifty on 30 minute chart

This is 30 minutes time bar chart of Nifty covering bounce from 26 Dec 2016 low 7893. The whole bounce from low started slowly and gained speed as progressed higher. This is the same chart with explanation which I had explained in my last report because there is no major change in wave counts on this chart.

Overall, it may be wave (3) completed at 8183, (4) completed at 8133 as “Irregular Correction” and wave (5) may be in progress from 8133. 38%-61% projection for wave (5) is placed at 8249-8309 where 8241 is already achieved and 8309 is almost achieved (high was 8306). (There are repeated Irregular Corrections in this whole bounce).

38%-61% retracement of this upside impulsive wave (from 7893-8306) is placed at 8148-8050 which is the expected range on downside if Nifty has to fall.

Other Possibility: It may also be inner wave (iii) of (3) completed at 8183 and inner wave (v) of (3) in progress from 8133 as overall bounce from low 7893 still seems faster. So, we will let this impulse started from 8133 complete first and further will look if it was wave (v of 3) or (5).

So, let’s have a closer look at the progress of wave (5) for more clarity.

Elliott wave counts of Nifty on 15 minute chart

Elliott wave counts of Nifty on 15 minute chart

This is 15 minutes time bar chart of Nifty covering move from 02 Jan 2017 low 8133 which I am expecting as start of wave (5). Again there is no major change in wave counts and Nifty is still progressing as per expectations.

The first bounce from 8133-8219 with overlapping of waves looks like “Leading Diagonal Triangle” (LD) and I had explained this whole pattern in details in my earlier analysis report Elliott Wave Outlook of Nifty After Break Above 8274 – Example of Leading Diagonal

So, the move from 8133-8219 is following all the rules of Leading Diagonal and if this move is really LD then it must be wave (i) because LD can happen only within wave (i). And further if it is wave (i) than Nifty needs to complete wave (iii) and (v) to complete an impulse.

And in impulse, wave (iv) can not overlap (i). So, if the wave from 8113-8219 is Leading Diagonal as wave (i), and wave (iii) already completed at 8306 then wave (iv) cannot overlap wave (i). End of wave (i) is 8219, so Nifty should not even touch 8219 otherwise we are wrong in marking wave from 8133-8219 as LD.

So calculation wise, if wave (i) completed from 8133-8219, (ii) completed from 8219-8181 and (iii) completed from 8181-8306 then wave (iv) already retraced more than normal 38% retracement. 38% retracement of wave (iii) is placed at 8258 whereas Nifty declined till 8227.

Wave (iv) retraced more than 38% but Leading Diagonal type of pattern is not giving confident sign of reversal. Possibility of Leading Diagonal will be negated only if Nifty breaks below 8219 [If wave (iv) overlaps (i)]. So, we can think of any reversal only after seeing a break below 8219.

On the other hand, wave (iii) is less than 161% thus not extended, so wave (v) needs to project minimum 61% or more. 61%-100% projection for wave (v) calculated from 8227 is placed at 8333-8400 if wave (v) is still pending. So, 8333 is the minimum point we can expect on upside.

Conclusion:

There is no change in wave counts and scenario on charts as Nifty is moving with expected pattern. There is Leading Diagonal type of pattern after 8133 which is suggesting an upside impulse but inner wave (iv) of this impulse is already retraced more than 38% which is not normal. So, we need to wait for the break below 8219 to thinks about reversal otherwise there is every chance to hit 8333.

For Trading Point of View:

  1. Short Term strategy must be buying on Dips as long as Nifty is trading above 8219 or until 8333 is achieved. Existing longs can be hold or fresh longs can be taken with stoploss of 8253 (1 point below the end of wave (1) of (v) on last 15 minutes chart) expecting minimum upside target 8333 which further can extend towards 8400. Final and exact stoploss for longs is 8219 until Nifty achieves 8333.
  1. Shorts can be planned only “after achieving 8333” or “after break below 8219” after taking conformation from the pattern at that time.

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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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