Elliott Wave Update of Nifty for 17 May 2016 Onward

| May 17, 2016

This Elliott Wave Analysis report is further update on my previous analysis report Nifty can Bounce above 8032 without breaking below 7730 – EW Analysis on 15 May 2016 where I expected a bounce from 7783-7757 range for 8032 and Nifty already bounce 100 points from that range. I have updated the further possibilities and stoploss and outlook in this report. Please manage you trades accordingly as patterns are changing frequently and there will be no further updates on my blog for this week.

Nifty opened mild gap up at 7831 but declined sharply from 7845 to 7800 within 10 minutes after opening followed by consolidation between 7800-7772 range till 2 PM. Then Nifty bounced again by 100 points from low to register day’s high 7872 before closing 45 points up at 7860.

In Yesterday’s report, I suggested Buy on Dips for Nifty with stoploss of 7730 expecting positional targets above 8032, also suggested buy 7900 May cal on Dips. Nifty bounced from 7772 to 7872 and 7900 cal is almost double from today’s low. Now, let’s analyze fresh charts for further outlook of Nifty.

Today I am showing Nifty move from 29 Feb 2016 low 6825. Earlier counts you can read in my previous analysis report Elliott Wave Analysis Report of Nifty for 02 May 2016.

Nifty Elliott Wave Analysis for May 2016 Expiry

Nifty Elliott Wave Analysis for May 2016 Expiry

This is hourly time bar chart of Nifty covering move from 29 Feb 2016 low 6825. This is the same chart with explanation which I explained in my yesterday’s report.

I explained in my previous report that conditions are favoring the possibility of formation of Ending Diagonal (ED) on this chart after 7405 which I also mentioned in my previous analysis report. It may be wave (4) completed at 7405 followed by wave (5) is in progress as Ending Diagonal where: –

  1. Inner wave (i) completed from 7405-7777 as (abc)
  2. Wave (ii) completed from 7777-7517 as Simple Zigzag (abc)
  3. Wave (iii) may be completed from 7516-7978 as (abc)
  4. Wave (iv) may be completed from 7978-7678 as Irregular Correction
  5. Last wave (v) may be in progress which must be completed as (abc) pattern and need to project minimum 61%. So, 61% projection of wave (v) of ED is placed at 8032 which must be the minimum target if we are right at identifying the pattern. And within wave (v) of ED which must be (abc), wave (a) may be completed, (b) is in progress and wave (c) upwards is pending for 8032. But wave (b) of (v) should not break below the lower line otherwise pattern will be negated.

So, If the pattern I explained above is correct then Nifty should not break below the lower line of Ending Diagonal (ED) to keep this pattern intact as shown on chart. Breaking below lower line before breaking above 7992 will negate the ED pattern. So, positional stoploss for longs must be that lower line of ED which is around 7730-7740 right now. And any decline near that lower line can be bought with stoploss below the line expecting minimum target 8032.

Now let’s have a look at progress of inner wave (v) of Ending Diagonal Triangle started from 7678 on 5 minutes chart.

Nifty Elliott Wave Analysis for May 2016 Expiry

Nifty Elliott Wave Analysis for May 2016 Expiry

This is 5 minutes time bar chart of Nifty covering move from 06 May 2016 low 7678 which I am expecting as start of inner wave (v) of (5) progressing as Ending Diagonal Triangle Pattern which must be in (abc) pattern.

I explained in yesterday’s report that inner wave (A) of (v) may be completed from 7678-7916 and (B) may complete in 7783-7758 range followed by bigger wave (C) for 8032.

Nifty achieved lower range of 7783-7758 and also bounced by 100 points but the wave from high 7916 to low 7772 looks like an impulse and wave (B) can never be impulse. So there are many possibilities either wave (B) is not completed or there is some pattern in progress which I am not able to identify yet.

So, we need to protect our trade/profit by trailing stoploss or trade management against other probabilities. There is 100 points bounce from 7772-7872 at last, so our stoploss can be at 61% retracement of this bounce which is at 7810, which is well above our entry levels.

There is one more possibility of Triple Zigzag correction within inner wave (iv) of (5) which is explained on next hourly chart.

Possibility of Triple Zigzag Correction

Possibility of Triple Zigzag Correction

This is hourly chart of Nifty covering move after 16 Mar 2016 low 7405 which I have shown as start of wave (5) on first hourly chart progressing as Ending Diagonal Triangle (ED).

After seeing the wave counts on 2nd 5 minutes chart, there is a possibility that inner wave (iv) of this ED is still running as Triple Zigzag correction as shown on chart. Please look carefully at inner wave counts and pattern of inner wave (iv).

Wave (iv) may be progressing as Triple Zigzag where abc-x1-abc-x2 is already completed and last (abc) cycle is in progress. In this case also Nifty needs to bounce above 7992 but first needs to complete this Triple Zigzag below 7678.

But, this possibility of pattern will be negated if Nifty break above upper line of this Triple Zigzag correction which is around 7900 at present (upper blue line joining end of wave X1 and X2 within wave IV).

Remember, this is just the possibility I have mentioned and a “note to remember” for the learners that how we can identify other possibilities, how to take action according to it and we should not ignore any possibilities. This possibility we need to keep in mind just to protect/manage our existing trade which is in good profit.

Conclusion:

After analyzing all the conditions on chart, Nifty has possibilities to break above 7992 and may be till 8032 but there is bit confusion in because of the pattern formed at bottom 7772. A possibility for 7678 is also there which will be negated after Nifty breaks above 7900. So we are going with possibility of Nifty above 7992 but with protection plan. So, stoploss of any existing trade must below 7809 which is just below 61% retracement of last bounce started from 7772.

Our trade to buy Nifty in between 7783-7758 with stoploss of 7730 is in good profit, so we need to manage it by booking some profit and trailing stoploss for the rest to 7809.

Our trade in Nifty 7900 cal is also is good profit, 7900 Nifty call was also doubled if someone trade at low and it is still in good profit even if someone didn’t manage to buy at low. We must book a option trade whenever it is giving reasonable profit because of premium reduction. So, book some profit in 7900 cal and place trailing stoploss for rest at your entry levels.

Note: Please manage you trades accordingly as patterns are changing frequently and there will be no further updates on my blog for this week. You can join my Facebook group Practical Application of Elliott Wave Theory as I often upload my Elliott Wave Analysis report after market hours. Update of 18 May 2016 is already uploaded there for download.

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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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