Elliott Waves Analysis Report of Nifty for 05 Sept 2014

| September 4, 2014

Nifty gives some correction today and closed in red -20 points after long time. Though my stoploss of yesterday’s longs was triggered and I lost 12-15 points. 8109 was the breakout point for today and Nifty was showing opening at 8114 around 9:10 AM so I used initial stoploss at 8099 to see how Nifty behave in first 15 minutes so that decide If I can hold longs or not, but Nifty broke 8109 and declined till 8100 within second after opening. So there was no point to hold longs as previous pattern was failed and next pattern was showing 8074-8056 in Nifty. Finally I closed longs taken yesterday at 8109-8111 (NF 8136) in 12 points loss at NF 8124.

Though stoploss was taken but Nifty gave another good buying opportunity at lower levels. I bough Nifty Futures at 8102 which is going good but some of clients exited those longs because of my mistake in suggesting wrong stop loss (levels confusion) which I got late to correct.

Let us see the possible road map of Nifty for next sessions:

Elliott Wave Analysis of Nifty

Elliott Wave Analysis of Nifty

This chart is covering move from 7857-8141 that is wave 5 of total up move taken from 7540. Waves 0-3 I am assuming from 7540-7919. So, this is wave 5 started from 7857 as of my counts that is already entered in extended zone after crossing 8124. I am leaving that previous counts and concentrating on this impulse started from 7857 to expect further Nifty road map.

From chart it seems, wave 3 is completed at 8141 and next down move is correction for wave 4. Though it looks like wave 4 completed at 8061 as it completed complete ABC cycle but may be it turns into any other complex formation to show lower levels as wave 2 was also simple zig-zag (possibility).

If wave 4 is completed at 8061 then Nifty may show minimum levels of 8168-8235 in normal cases. But Nifty has to touch at least 8142 to avoid 5th failure. Till now we can expect at least 8142-8168 in these conditions if counts are correct.

Overview of Today’s move:

05 Sep niftyThe move from 8141-8061 can be taken as ABC correction for wave 4 following Alternation rule of EWT that suggest if wave A is sharper then you can expect slower wave C. I can’t take it as 1-2-3 as wave 3 is not expected to be slower.

So, we can expect C completed at 8061 followed by start of new impulsive (most probably wave 5 if we see at higher degree). Where wave 1 and 2 of upside impulsive is completed at 3 is in progress (only if wave 4 is completed at 8061).

Seeing present  scenarios, it suggest gap opening as wave 3 seems to be mid way and wave 3 is known for sharpness and gaps. Seeing counts till now, it suggest levels at least till 8141 so I would like to trail stoploss for my longs.

Trading strategy:

I am continuing with my longs taken at Nifty Futures at 8102 and will trail stoploss after tomorrow’s opening seeing live conditions. Stoploss for buys till now is 8067 spot. We see if I get any opportunity for those who missed or exited longs today. But it seems Nifty may not give any chance for safe buying and we have to wait for other opportunity later.

Words of cautions:

Majority is in favor of sell now and already started building short positions. Though time of reasonable correction seems near but Nifty may not give you chance easily. Wave 5th is started now, the next move for some time (1-3 sessions) may be tough, when majority favor selling, and market will not give you chances to enter easily.

Stoploss of weak traders may hit and small trader like me (I know I am an average analyst but a worst trader) get penalized. Patience is the key.       

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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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