Nifty opened mild gap up at 8625 but declined sharply below 8600 to register day’s low 8581 (8625 was just flash open). Nifty bounced again sharply from lower levels by 70 points towards 8650 followed by consolidation before closing 22 points up at 8638.
Yesterday, I expected a possibility of Irregular Correction and mentioned if Nifty opened gap down or decline sharply towards 8577 followed by sharp reversal within 15-30 minutes then Nifty can bounce by 70-100 points sharply. Though timings for deciding trade missed by 10-15 minutes because 8625 opening was just a flash opening and it is almost impossible to predict completion of Irregular in advance which can be identified during live market only but Nifty reacted exactly as per the conditions explained. Nifty declined sharply till 8581 followed by a sharp bounce of 70 points. Let’s have a fresh look at latest charts for further scenario.
Today I am covering decline from 17 Oct 2016 low 8506 whereas previous wave counts are explained in my previous analysis report Elliott Wave Analysis Report of Nifty for 28 Oct 2016
This is 15 minutes time bar chart of Nifty covering bounce after 17 Oct 2016 low 8506.
The inner waves of first bounce from 8506-8594 are not clear but it can be wave (1 or A) because next bounce from 8570 is bigger, sharper and carrying the personality of wave (3 or C).
But further there is lack of clarity in waves, I am not able to conclude if it is wave (C) completed at 8736 or (5) completed at 8736. Wave counts for both the possibilities are explained on chart. Please read the chart carefully because these wave counts cannot be explained theoretically. We can only conclude either wave (C) or (5) completed at 8736.
And further if we look at decline from 8736 then it may be wave (a or 1) from 8736-8663, wave (b or 2) from 8663-8700 and wave (c or 3) from 8700-8550. Inner wave (v) of (c or 3) is highly extended and retraced almost 100%.
Now if this whole decline from 8736-8550 is (1), (2) and (3) then wave (5) downwards is still pending which needs to complete below 8550. And if this decline is waves (a), (b) and (c) then Nifty can keep rising for 8736-8780-8834.
100%-123% projection of previous upside wave from 8506-8736 is placed at 8780-8834 if calculated from last low 8550. Whereas, 38% retracement of whole decline from 8736-8550 is placed at 8621 which is already breached. So now, we need to look at the pattern of bounce from low 8550.
This is 5 minutes time bar chart of Nifty covering bounce from 27 Oct 2016 low 8550.
It seems wave (A or 1) completed from 8550-8608, (B or 2) completed from 8608-8581 as Irregular Correction Wave (C or 3) is in progress from 8581. Wave (C or 3) achieved normal 100%-123% projection placed at 8639-8652.
And within wave (C or 3), there is a sharp bounce from 8581-8649 which I am not able to conclude if it is inner wave (i) of (C or 3) or (iii) of (C or 3) but there is again an Irregular Correction like pattern at top after 8649 which is marked on the chart. Please look at chart carefully.
The irregular Correction like pattern at top is indicating a gap up or sharp bounce from lower levels for a high above 8652 again. And 61%-78% retracement of whole wave (C or 3) is placed at 8606-8595 below which we can think of any reversal.
There is no change for medium term, conditions are suggesting a new high above 8968 sooner or later but we can’t conclude if straightway from here or after registering new low below 8506. We need to trade with proper risk management to catch this move.
For very short term, Nifty is looking positive and indicating a Gap up or good bounce from lower levels where as 8595 is the point below which we can think of any reversal and same must be the stoploss for any existing or fresh longs.
And Nifty is at such a points where it needs to bounce sharply from here if it has to bounce above 8736 otherwise any consolidation of for a day or two can cause a decline below 8550 again.
For Trading Point of View: –
For Medium Term, 8900-9000 calls if taken in 8648-8593 range can be hold without any stoploss till further updates as explained in my last reports but quantity must be light as suggested and avoid adding fresh position.
For Intraday or short term, Stoploss for any existing or fresh longs must be 8595 which further must be changed to 8631 if Nifty even touched 8654. And any fresh longs can be taken if get price 20 points nearer to stoploss based on the conditions explained.
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