Elliott Wave Updates of Nifty for 18 Oct 2016

| October 17, 2016

Nifty opened gap up today at 8612 but declined sharply just after opening and traded with negative bias for rest of the day. Nifty decline almost 110 points from day’s high before closing 63 points down at 8520.

Yesterday, trading strategy was to buy Nifty if “open gap up above 8618” or “break sharply above 8619 after opening” with 20 points stoploss OR Sell if Nifty consolidate below 8618 for couple of hours with stoploss of 8619 expecting 92-150 points decline. Our second conditions/strategy activated when Nifty opened gap up but failed to touch 8619 and was trading at 8590 around 11:15 AM and then declined to register day’s low 8506, more than 92 points from high. Let’s have a fresh look at latest charts for further scenario.

Today I am covering move from 04 Oct 2016 high 8806 as previous waves counts are explained in my last analysis report Nifty Can Bounce towards 8700-8800 from 8550-8393 Range.

Elliott Wave Counts of Nifty for 18 Oct 2016

Elliott Wave Counts of Nifty for 18 Oct 2016

This is 15 minute time bar chart of Nifty covering decline after 04 Oct 2016 low 8806.

The decline from 8806-8731 may be wave (1 or A), bounce from 8731-8781 may be wave (2 or B) and wave (3 or C) may be completed at 8506 or still in progress. Although, waves (C or 3) has achieved its minimum requirements. I am showing the possibility of both (123) and (ABC) because there is also a possibility of complex correction for whole decline started from 8968.

Now, If it is wave (C) complete at 8506 then we can see a new impulse towards 8675-8740. But if it is wave (3) completed at 8605 then we can see a 23%-38% retracement/bounce of wave (3) for wave (4) followed by wave (5) downwards/decline of 100-160 points again.

23%-38% retracement of wave (3) is placed at 8570-8611. So, we can expect a bounce towards 8570-8611 in both the cases and same 8570-8611 is the range where we need to look at the fresh pattern to conclude further move and to decide further trading plan. And 38% retracement 8611 is the point above which we can think of any reversal.

Conclusion:

For medium term, same as I have explained in my yesterday’s report that pattern of the whole decline from yearly high 8968 still looks corrective because of overlapping of waves. Otherwise Nifty need decline sharply with speed without any break to keep the personality of downward impulse. Most of the conditions are favoring a bounce till 8700-8800 range or may be above 8968 from 8506-8393 and one rare condition is indicating a sharp continuous decline towards 8200.

And for very short term, we need to wait for bounce / 23%-38% retracement of wave (C or 3) to conclude further scenario. 23%-38% retracement of wave (C or 3) is placed at 8570-8611 if calculated from 8506. We can see either a bounce towards 8675-8740 or a decline of 100-160 points again from 8570-8611 range, so bounce towards 8570-8611 is at least expected in both the cases. And 38% retracement 8611 is the points above which we can think of any reversal.

For Trading Point of View:

For Medium Term, Same Nov 8900 Call if bought at 8550 or below 8541 spot can be hold without any stoploss till further updates. And same as I explained in last report that this should not exceed 5% of capital as this 8900 Nov Call has every possibility to be Zero. This trade is done just based on the general structure of pattern and not on deep wave counts.

For Short Term, we need to avoid further shorts and wait for bounce towards 8570-8611. And further: –

  1. If we identify the completion of any corrective pattern before 8611 then Shorts can be taken with stoploss some points above 8611 expecting 100-160 points decline. Only experienced traders having understanding of EWT patterns can take this trade as it needs identification of pattern during market hours.
  1. If Nifty have to bounce above 8611 towards 8675-8740 then we already holding 8900 Nov Call in light quantity which can be managed further after seeing latest pattern. Experienced traders having understanding of EWT patterns can also use bounce of 23%-38% (towards 8570-8611) for intraday trades if getting good risk reward.

Overall for short term, any exact trade with exact entry levels and exact stoploss cannot be decided at this moment. Further confident trade can be decided only after seeing a bounce of 23%-38% or after identifying any other particular pattern. Safe traders can wait for perfect opportunity.

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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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