Elliott Wave Trading Strategy of Nifty on RBI’s Policy Meet

| December 6, 2017

Nifty opened lower at 10118 and declined further to register low 10069 but bounced from lower levels by more than 70 points to register high 10147 and finally closed 9 point down at 10118.

Friday, Nifty was in negative zone with 10214 as breakeven point and 10013-9993 is range on downside from where a small or big bounce was expected. I suggested 10214 as stoploss for shorts and positional longs near 10013-9933 range. Nifty declined till 10069 and closed at 10118. Let’s have a fresh look at latest chart for further scenario.

Today I am covering bounce from 28 Sep 2017 low 9687 and earlier wave counts are explained in my previous analysis report Fresh Elliott Wave Analysis of Nifty on All Time Frames as on 14 Aug 2017

Elliott wave counts of nifty on daily chart

Elliott wave counts of nifty on daily chart

This is daily time bar chart of Nifty covering bounce from low 9687 which I marked as start of new upside impulse. This is the same chart with explanation which I had explained in my last analysis report because there is no major change in wave counts on this chart.

Wave counts are not completely clear but casually it seems wave (1) completed from 9786-9945, (2) completed from 9945-9881, wave (3) may be in completed from 9881-10490, wave (4) may completed at 10094 or still in progress in progress.

Wave (4) retraced deeper below 38% retracement placed at 10183 which is the point of confusion. Next 61% retracement is placed at 9993 which is applicable if I am wrong in marking end of wave (3) at 10490.

Nifty breached earlier low 10094, so the decline from 10490-10094 can be wave (a), bounce from 10094-10409 can be wave (b) and decline from 10409 can be progress of wave (c). Normal 100%-123% projection for wave (c) is placed at 10013-9919, otherwise wave (c) already achieved its minimum Fibonacci requirements after breaking below 10094 and achieving 61% projection.

So, we need to analyze the pattern of wave (c) started from 10409 on separate lowest possible time frame.

Elliott wave counts of nifty on 15 minute chart

Elliott wave counts of nifty on 15 minute chart

This is again 15 minute chart covering decline from 10409 which looks like an Impulsive decline.

It seems inner wave (1), (2) is completed and (3) may be completed at 10069 and wave (4) may be in progress. 23%-38% retracement of wave (3) is placed at 10149-10198. So, 10198 is the breakeven point above which we can think of any reversal.

Conclusion

Short term outlook is still negative as long as Nifty is trading below 10198. And 10013-9933 is the range on downside where Nifty can find for a small or big bounce which further can extend for new high.

The pattern of bounce from low (from 10069-10147) is still corrective. So, we need to wait for the formation of upside impulse followed by downward corrective pattern for confirmation, otherwise 38% retracement 10198 can be taken as reversal point.

Trading Point of View:

The outlook is still negative as long as Nifty is trading below 10214 but there is possibility of good reversal from 10013-9993 range if reached there.

So, if anybody holding shorts or want to create shorts then stoploss must be placed some points above 10198. And any decline towards 10013-9993 can be used to create positional longs strategically using stoploss of 9919 points expecting bounce of minimum 150 points which further can extend for new high. Stoploss is very big, so trade can be done in options or hedge trade can be initiated.

**Trade in options only after 6 Dec (tomorrow) because premium is very high due to RBI Policy meet and this high premium can decline drastically after the completion of event.

** Hedge Trade: Nifty if decline near 10013-9993 range the “Buy Nifty Dec Future and Sell 10000 Dec Call” in equal quantity and hold the trade with stoploss some points below 9919.

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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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