Elliott Wave Report of Nifty for 23 Oct 2015

| October 22, 2015

Nifty opened flat at 8258 on Wednesday and traded with positive bias till afternoon session to register day’s high of 8294 but again fell sharply without achieving 8298. Nifty declined almost 80 points from high in just 60 minutes followed by recovery before closing 9 points down at 8251. Let’s have a fresh look at latest charts now.

Today I am covering Nifty move after 29 Sep 2015 low 7691 which I am expecting as start of wave (C or 3) explained in my previous report Nifty Elliott Wave Analysis for the Week commencing 19 Oct 2015. Previous counts are same as I explained in this report.

This is 15 minutes time bar chart of Nifty covering move after 29 Sep low 7691 which I am expecting as start of wave (C or 3).

Elliott Wave Analysis of Nifty for 23 Oct 2015

Elliott Wave Analysis of Nifty for 23 Oct 2015

If I look at the progress wave (3 or C) then a new upside wave is started from 8088. This new upside wave can either be start of some sort of inner wave (3) or (5). So, we will go with minimum and assume it as start of inner wave (5) from 8088.

So, it seems inner wave (3) completed at 8242, (4) completed at 8088 and wave (5) is in progress. Minimum 38%-61% projection for wave (5) is placed at 8298-8428 which can be achieved in coming sessions if I am right at identifying. We can expect minimum 38% at least which is at 8298 and further pattern can be concluded after reaching this minimum 8298.

But again, Nifty bounced till 8294 and corrected from there, still short of minimum 38% projection 8298 and declined back leaving suspense again.

Now, let’s have a look at move after 8088 on separate 5 minutes chart:

Elliott Wave Analysis of Nifty for 23 Oct 2015

Elliott Wave Analysis of Nifty for 23 Oct 2015

This is 5 minutes time bar chart of Nifty covering move after 8088 which I am expecting a start of inner wave (5) of (3 or C).

There are possibilities that inner waves (3) completed at 8294 followed by wave (4) may be completed at 8217 on Wednesday as Irregular/Flat Correction. I am expecting it as Irregular Correction because if I assume wave (4) completed at 8230 (marked with blue number) then next upside wave doesn’t achieved 38% projection which was at 8308.

And this bounce from 8230-8294.40 can never be wave (2) as it broke previous high. Previous high was 8294.04 and Nifty bounced till 8294.40 after that.

So, by analyzing all the conditions, the bounce from be inner wave (b) of Irregular/Flat Correction followed by sharp and fast wave (c) from 8294-8217.

If I am right at identifying and wave (4) completed at 8217 then, Nifty can bounce again minimum till 8295-8344 which is 38%-61% projection for wave (5).

Let’s see this expected Irregular Correction type of pattern on separate 5 minutes chart:

Elliott Wave Analysis of Nifty for 23 Oct 2015

Elliott Wave Analysis of Nifty for 23 Oct 2015

This is 5 minutes time bar chart of Nifty covering move after 20 Oct 2015 high 8294. This is the closure look at expected “Irregular/Flat” correction pattern which I have explained above.

Here, decline from 8294.04-8233 may be wave (a), bounce from 8233-8294.40 may be wave (b) of Irregular/Flat Correction which also looks  like a ‘abc’ followed by sharp and fast impulsive decline as wave (c).

Other observation:

If we look at last bounce from 8217-8264, the bounce is a 3 wave’s move till now. Where 8217-8250 may be wave (a or 1), 8250-8222 may be wave (b or 2) and next bounce from 8222-8264 may be wave (c) or progress of wave (3), may be inner wave (i) of 3.

Calculation wise, wave (c or 3) is exactly 123% of wave ( a or 1) which is perfect Fibonacci calculation for ‘abc’ correction (as shown by blue marking) . And bounce from 8217-8264 is exactly 61% retracement of previous decline of 8294-8217 which is perfect Fibonacci calculation for wave 1 and 2 (as shown by red marking). Now,

  1. If move of 8217-8250-8222-8264 is wave (1), (2) and progress of (3) then Nifty can bounce minimum till 8295 and even till 8344 and above. Confirmation may be after break above 8264.
  1. If move of 8217-8250-8222-8264 is wave (a), (b) and (c) then Nifty can give a sharp decline of 80-100 points may be till 8184-8164. Confirmation may be after break below 8217.

Lesson for learners:

This is the main factor of EWT which confuses most of the EWT analysts. If we see the wave’s pattern from 8294.40-8217-8264 then it clearly looks like Impulsive decline followed by ‘abc’ corrective bounce with exact 61% retracement. Even ‘abc’ corrective bounce from 8217-8264 follows perfect Fibonacci Ratios within inner waves. This pattern is suggesting downwards wave (1) and upward (2) and we can expect a good decline as wave (3).

But if we look at whole pattern from 7691 then whole story is something different, there are also the possibilities for that impulsive decline from 8294.40-8271 as inner wave (c) of Irregular Correction followed by progress of next upside wave which can go higher.

That is the factors which differentiate success and failure. If we look at all time frames and try to see all possibilities (don’t ignore any possibilities), try to comply patterns with all the rules (Wave’s Cycles, Wave’s Personalities, Wave’s Patterns and Fibonacci Calculations) then margin of error reduces.

There is a possibility for both the patterns but we can avoid mistakes in trading decisions which we make in hurry. Suppose, if someone looks only at  move of 8294.40-8217-8264 as impulsive downwards followed by corrective ‘abc’ as wave 1 and 2 and take shorts in expectation of fast and sharp wave 3 downwards  then it will be a good loss if Nifty opens gap up above 8294 and make it some other pattern which you have ignored.

Yes, we can never be 100% accurate but being familiar with all the possibilities reduces the possibilities of mistakes. And reducing the mistakes only increases success ratio. And if we keep patience and wait at the time of confusion, then market shows clear and clean patterns frequently where we can make very confident trading decisions.

Conclusion:

Nifty had left a suspense by decline without achieving 8298 and the decline from 8294-8217 is impulsive move. This impulsive decline can be either inner wave (c) of Irregular Correction as explained above or it can be inner wave (a) of downward correction or inner wave (i) of downward impulse. So, any trading decision can be made only after seeing further move.

So, Nifty can be bought if break above 8265 using stoploss of 8245 expecting targets above 8295. Book part profit or modify stoploss at 8263 if break above 8295. Follow strict stoploss.

Nifty can be sold if break below 8217 with stoploss of 8241 expecting targets of 8184 and below. Book part profit or modify stoploss at 8217 if break below 8184. Follow strict stoploss.

If someone have patience to wait then it is wise to trade very low and avoid having big position till we see any clarity in whole positional pattern as this type of wave patterns often end with a big move which can be identified only when the actual time comes. Be strict to light and intraday trade only based on smaller inner wave patterns. It is even better if someone have patience to avoid trade.

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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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