Elliott Wave Outlook of Nifty for Budget Day 29 Feb 2016 Onwards

| February 28, 2016

Nifty opened huge gap up at 7039 and bounced till 7052 but failed to sustain at higher levels and declined to register day’s low 6985. Nifty bounced from lower levels again till 7050 before closing 59 points up at 7029. Overall, it was a Volatile Day with Up-Down-Up swings.

Yesterday, I expected a small bounce followed by decline and suggested to Sell Nifty if come around 7072 with small stoploss of 17 points and targets can extend to 6869. Nifty bounced till 7052 followed by decline of 65 points. Let’s analyze latest charts for further scenario.

Today I am showing wave counts of Nifty from 01 Feb 2016 high 7600 and read my analysis report Nifty Indicating Cautions for Decline Below 6869 Again – EW Analysis for 22 Feb Onwards for previous wave counts.

Elliott wave counts of Nifty 29 Feb 2016

Elliott wave counts of Nifty 29 Feb 2016

This is 30 minutes time bar chart of Nifty covering decline from 01 Feb high 7600. It seems wave (3) completed at 6869 and wave (4) completed at 7252 followed by the start of wave (5).

Minimum 38% projection for wave (5) is placed at 6972 which is well above the end of wave (3) whereas wave (5) needs to complete below end of wave (3) which is placed at 6869. Next 61% projection for wave (5) is placed at 6800.

So, we can expect minimum 6869-6800 levels for wave (5) on down side. Now, we need to see wave (5) separately on lowest time frame chart. These counts will be negated if Nifty breaks above 7252 again.

So, let’s have a separate look at decline from 23 Feb 2016 high 7252:

Elliott wave counts of Nifty 29 Feb 2016

Elliott wave counts of Nifty 29 Feb 2016

This is 5 minutes time bar chart of Nifty covering move from 23 Feb 2016 high 7252 which I am assuming as progress of wave (5).

Again, the decline from 7252 seems impulsive but the move is sharp without any reasonable correction. So, it is difficult to identify inner waves confidently. Most probable counts as per my understanding I have shown on chart.

May be wave (3) completed at 6961 which projected exactly 123%, thus not an extended wave (3). So, we can expect wave (5) as extended which needs to project minimum 61%.

38% retracement of whole decline from 7252-6961 is placed at 7072 now. I am taking 38% retracement of whole decline from 7252-6961 because wave (2) as per these counts is not even 38% and waves are not completely clear. So, possibility for any reversal can be seen only above 7072 after seeing latest pattern.

And based on the wave counts shown on above chart, wave (4) already achieved 23% retracement after breaking 7029. So, if wave (4) is already completed at 7052 then minimum 61%-100% projection for wave (5) is placed at 6872-6761.

Wave (5) will be extended after achieving 61% projection which again will raise the possibility of a sharp bounce till start of wave (5) from lower levels.

Conclusion:

After analyzing conditions on all the charts, Nifty has possibility to decline till 6869-6800 as I explained above and in my previous reports also, where 6960 is already achieved till now. The decline from 7252 is without any reasonable correction so we need to take help of Fibonacci ratios 38%.

38% retracement of whole decline from 7252-6961 is placed at 7072 now, above which only we can think of any upside reversal. Till now Nifty seems “Sell on Rise” on every 23%-38% decline with stoploss above 38%.

So, nifty seems sell on rise till 7072 using strict stoploss 7107 expecting minimum target 6869. Use strict stoploss as Nifty can give sharp move tomorrow because of budget proposal and loss can be heavy if Nifty moved against our trade.

We can see a good bounce of minimum 200 points again from 6869-6761 range but actual levels and any trade can be decided only when Nifty actually break below 6869 after seeing latest pattern. This is just the possibility to keep in mind as of now.

Any trade can be initiated only during live market hours after identifying latest pattern based on above mentioned conditions. Trade light keeping in mind your risk appetite and with strict stoploss to protect you from heavy losses in case our trade goes wrong.

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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"