Elliott Wave Outlook of Nifty for 26 Jul 2018 Expiry

| July 25, 2018

Nifty opened higher at 11109 and bounced further to register day’s high 11143 but declined back sharply to register day’s low 11092 and closed 49 points up at 11134.

Yesterday, Nifty was expected to decline towards 10893-10756 range in coming days without breaking higher above 11327. And Intraday/very short term decline was expected without breaking higher above 11179.

I didn’t suggest any trade and preferred to wait for clarity in pattern.  Now, let’s have fresh look at latest charts to calculate further scenario.

This analysis report is covering move after 9951 and earlier wave counts are explained in my last “All Time Frames” analysis report Fresh Elliott Wave Analysis of Nifty on All Time Frame dated 03 Jun 2018.

Elliott Wave Analysis of Nifty for 26 July Expiry

Elliott Wave Analysis of Nifty for 26 July Expiry

This is daily time bar chart of Nifty covering bounce after low 9951 which I marked as start of wave ‘v’ on daily chart in my last “All Time Frames” Report. This is the same chart with explanation which I had explained in my last analysis report because there is no change in wave counts on this chart.

It seems inner wave (1) completed from 9951-10229, wave (2) completed from 10229-10111 as Irregular Correction and wave (3) may be completed at 10929, wave (4) may be completed at 10417 as Simple Zigzag and wave (5) may be in progress. [Wave (4) retraced deeper than 38%).

Wave (5) already achieved 61% projection after breaking above 11022, so we need to concentrate on its pattern now onward. The pattern of wave (5) looks like an Ending Diagonal Triangle (ED) till now.

So, let’s analyze the progress of expected wave (5) started from 10417 on lowest possible time frame chart to check its pattern closely.

Elliott Wave Analysis of Nifty for July 2018 Expiry

Elliott Wave Analysis of Nifty for July 2018 Expiry

This is hourly time bar chart of Nifty covering bounce from 10417 which I have marked as start of wave (5) on daily chart. This is again the same chart with explanation which I had explained in my last analysis report because there is no change in wave counts on this chart.

The pattern of wave (5) looks like an Ending Diagonal Triangle (ED) [(3-3-3-3-3) or (abc-abc-abc-abc-abc) structure] with inner wave [i] of ED completed from 10417-10893, [ii] completed from 10893-10557 as Double Zigzag correction and wave [iii] may be in progress.

Normal 100%-123% projection for wave [iii] of ED is placed at 11033-11145 whereas 11033 is already achieved. 161% projection is placed at 10327 which is the maximum limit for wave [iii] because wave [iii] of ED can never be extended.

Otherwise wave [iii] needs to complete at or above the red dotted line drawn from endpoint of wave [i] because line joining wave [i] and [iii] of ED must be clear without any obstruction within.  Nifty if decline without touching dotted red line then wave [iv] will become Irregular Correction.

End of wave [i] is 10893 and next wave [iv] needs to break below 10893 to overlap [i].

Overall, 11327 is maximum limit for wave [iii] on upside and 10893 is minimum requirement for wave [iv]. So, this chart is suggesting minimum decline towards 10893 without breaking above 11327. But if Nifty breaks above 11327 without touching 10893 then the ED pattern explained on this chart will get negated.

Let’s have a separate look at progress of wave [iii] of ED to get more clarity.

Elliott Wave Analysis of Nifty for July 2018 Expiry

Elliott Wave Analysis of Nifty for July 2018 Expiry

This is 30 minutes time bar chart of Nifty covering bounce from 10557 which I am expecting as start of inner wave [iii] of ED on hourly chart.

It seems inner wave [a] of [iii] completed from 10557-10672, [b] completed at 10605 and [c] may be in progress. Wave [c] already projected more than 123% projection so we need concentrate on its pattern.

Within wave [c], it seems inner wave (i), (ii), (iii), (iv) is completed and wave (v) may be in progress. Wave (v) already achieved minimum 38% projection after breaking above 11105 and next 61% projection is placed at 11217 which may or may not be achieved.

Now, let’s have a separate look at progress of wave (v) of [c] to check its progress and pattern.

Elliott Wave counts of Nifty for 26 Jul Expiry

Elliott Wave counts of Nifty for 26 Jul Expiry

This is 15 minute time bar chart of Nifty covering bounce from 10925 which I am expecting as start of wave (v) of (c) on 30 minute chart.

The first bounce from 10925-11076 is a 3 waves (abc) move, decline from 11076-11035 can be corrective and further bounce started from 11035 already bounce above earlier high 11076.

So, if I take care of all the EWT rules then this wave (v) started from 10925 is also carrying the rules of Ending Diagonal Triangle with wave (1) completed from 10925-11076, (2) completed from 11076-10935 and wave (3) may be in progress from 10935.

Wave (3) of ED already achieved normal 100%-123% projection after breaking above 11121 and next 161% projection is placed at 11179 which is maximum limit for wave (3). Possibility of this ED will be negated if Nifty breaks above 11179.

And within wave (3), it seems inner wave (a), (b) is completed and (c) may be in progress. Wave (b) is very shallow. And within wave (c),

It seems inner wave 1, 2, 3, 4 is already completed and 5 of (c) may be in progress. Minimum 38% projection for wave 5 fall below the top of 3 so 11143 (top of wave 3) is minimum requirement for wave 5 to complete. Next 61% projection is placed at 11166. So, 11143-11166 minimum expected range for completion of wave 5 of (c) of (3) of ED.

Overall, if the pattern started from 10925 is really Ending Diagonal Triangle then Nifty needs to decline below 11076 [end of wave (1)] without breaking above 11179 [above 161% projection for wave (3)]. Possibility of ED will be negated if Nifty breaks above 11179 before 11076.

Conclusion

For long/medium term,

Same as I explained in my all time frames report, Outlook for medium/long term is still bullish because Nifty is within the middle of wave (3) on largest wave cycle and there is Irregular Correction at top. Nifty has long way to go with occasional corrections (maximum 23%-38% corrections with 9918 as breakeven point and 8968 as pattern negation point). Nifty may not break below 8968 in any case in coming years before competition of larger wave cycle.  We need to revise whole wave counts if Nifty ever broke below 8968.

For Short Term,

Nifty is expected to decline below 10893 without breaking higher above 11327 but internal wave structure is very complex to identify. The overall pattern from 10417 is carrying the rules of Ending Diagonal Triangle (ED) but very last pattern at top (from 10925) is also carrying the same personalities of ED.

It looks like a very smaller ED (stared from 10925) within bigger ED (started from 10417). This combination is indicating a very volatile move with repeated up down swings in coming days.

For Internal ED started from 10925, Nifty can first decline towards 11076-11000 without breaking above 11179 and then bounce again for new high without breaking below 10935. Breaking above 11179 will negate the possibility of this ED.

We need to keep all these conditions while deciding next trade.

Trading Points of View:

According to fresh conditions on charts: –

Based on larger pattern, Minimum downside target is 10893 but maximum upside limit is 11327 which is 250 points away. So, we can’t trade with that big stoploss and we need to wait for the formation of a small reversal pattern to initiate short term selling.

Based on Internal pattern, 11076 is minimum target and 11179 is maximum limit but there is no sign of reversal yet. So, we can take the help of opening price and 11179 to initiate shorts.

Note down the opening price and wait for 15 Minutes. Nifty if “trades below opening price at 9:31 AM” (15 minutes after opening) and “fails to break above 11179” (both conditions must match) then Sell Nifty on bounce near opening price using stoploss of 27 points  expecting decline towards 11076-11000 in coming days. Modify stoploss to cost when seeing 40 points profit.

Important Note: – As I already explained in my earlier report that a complex pattern Ending Diagonal Triangle in progress and inner wave of ED known to be tough and confusing. So, trade in light quantity and be quick in booking profit because inner waves can take any unexpected shape any time as we already experienced last week.

These are most probable trading conditions I can suggest in these conditions, otherwise traders ca plan their own trade based on the conditions explained 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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