EW Analysis and Outlook of Nifty for 12 Nov 2018 Onward

| November 11, 2018

Nifty opened higher at 10614, declined just after opening to register day’s low 10544 but bounced back and consolidated in 10544-10619 for rest of the day. Finally Nifty closed 13 points down at 10585.

Friday, 10667 was immediate resistance, 10477-10414 is immediate support and 10414 was breakeven point on downside. A minimum decline of 120-180 points was expected without breaking much higher above 10677. Any bigger fall was expected after breaking below 10414 only.

Trading strategy was to Sell Nifty near 10677 or after break below 10414. But Nifty traded in 10619-10544 range and didn’t give opportunity to trade. Now, let’s have a fresh look at latest charts for further scenario.

This analysis report is covering move after 6825 and earlier wave counts are explained in my last “All Time Frames” analysis report Fresh Elliott Wave Analysis of Nifty on All Time Frame dated 03 Jun 2018.

Elliott wave analysis on daily chart

Elliott wave analysis on daily chart

This is daily time bar chart of Nifty covering bounce after low 6825 which I marked as start of wave [V] on daily chart in my last “All Time Frames” Report.

The last bounce from 9951-11760 looks like a 3 waves move and Nifty declined very sharply from 11760 without completing Impulse or ED Pattern. So, wave counts and personality of move is indicating the possibility of Irregular Correction at top.

So, may be inner wave ‘3’ of [v] is completed at 11171 and ‘4’ may be in progress as Irregular Correction with inner wave (A) of ‘4’ completed from 11171-9951 as Impulse, wave (B) may be completed from 9951-11760 as (abc) and wave (C) may be in progress.

Wave (C) of Irregular Correction normally completes at or after the end of wave (A) which is 9951. And 38% retracement of wave ‘3’ is placed at 9918. So, 9951-9918 is general expected range for completion of Irregular Correction in this case. Otherwise, wave (C) already achieved its minimum requirements and projections.

Personality of Irregular Correction and its inner wave (C): – Irregular Correction is a sign of strong main trend and there is always a strong reversal after completion of Irregular Correction, it doesn’t give chance to trade some times.

But last wave (C) of an Irregular Correction is known to be sharp and destructive which scares and shake the confidence of traders before reversal. The decline started from 11760 was sharp and majority of traders/investors were already scared. Thus, the last decline started from 11760 is carrying the personality of wave (C) of Irregular Correction.

So, Nifty can first shake the confidence of mass traders (majority is already scared) and then reverse sharply to recover whole decline in very quick time if decline started from 11760 is inner wave (C) of Irregular Correction.

If Irregular Correction already completed at 10004 then Nifty must bounce straightway for new life time high in quick time.

So, let’s analyze the decline started from 11760 to check if wave (C) of Irregular Correction started from 11760 is already completed or not.

Elliott wave analysis on 5 hourly chart

Elliott wave analysis on 5 hourly chart

This is 5 hourly time bar chart of Nifty covering decline after 11760 which I am marked as start of wave (C) of Irregular Correction.

It seems wave (1) completed from 11760-11269, wave (2) completed from 11269-11523, wave (3) completed from 11523-10198, wave (4) completed from 10198-10710 as Irregular Correction and wave (5) may completed at 10004 or still in progress.

{Pattern of wave (3) [from 11523-10198)] is not completely clear but I am still marking it wave (3) because this decline from 11523-10198 is carrying steepest and faster move with big gap downs (personality of wave 3) and wave (4) retraced exactly 38% if I mark this decline from 11523-10198 as wave (3). So, the pattern of wave (3) is not completely clear but Personality of move and Fibonacci Retracement is supporting it}

Wave (5) started from 10710 already achieved minimum 38% projection and Nifty bounced back. So, may be wave (5) of (C) already completed but we need to wait for further confirmation because move is very big.

10710 is start of wave (5) and same is Reflex Point. The first impulse from low 10004 needs to complete above 10710 for confirmation of big reversal and we need to concentrate on bounce started from 10004 till then.

So, let’s have a separate look at bounce started from 10004 to identify further move.

Elliott wave analysis on 30 minutes chart

Elliott wave analysis on 30 minutes chart

This is 30 minutes time bar chart of Nifty covering bounce after 10004 which I am analyzing independently.

It seems wave (a or 1) completed from 10004-10285 (pattern is not confident), wave (b or 2) may be completed from 10285-10105 and wave (c or 3) may be in progress.

23%-38% retracement of progress of wave (c or 3) is placed at 10487-10414. So, 10487-10414 is still the immediate support range and 10414 is immediate breakeven point and Nifty already entered in this support range. Nifty can decline further towards 10105-10004 if breaks below 10414.

Within wave (c or 3), inner wave (iii) may be completed at 10441, wave (iv) may be completed at 10341 and wave (v) may be in progress. Inner wave (i) and (ii) is not identifiable.

Wave (v) already achieved normal 61% projection after breaking above 10548 and next 100% projection is placed at 10668 which may or may not be achieved. Wave (v) achieved 10616 till now.

Wave (v) projecting more than 100% (10668) is a rare case. So, 10668 is immediate resistance and Nifty can give a small or big decline before breaking much higher above 10668. Decline can be of 120-180 points [23%-38% retracement of wave (c or 3)] or towards new low below 10004.

Conclusion

For Medium/Long Term: – There is no change in medium/long term outlook, Nifty declined from 11760 without completing Impulse and there are indications of Irregular Correction at top. If it is Irregular Correction at top and decline started from 11760 is inner wave (C) of Irregular Correction then Nifty can bounce very sharply towards 11760 after completion of wave (C).

Overall pattern wise, 9951-9918 is normal expected range from completion of wave (C). Internal pattern of wave (C) had already achieved minimum projection, so if wave (C) already completed at 10004 then Nifty needs to bounce above 11760 in quick time. Pattern of wave (C) is not confidently clear, so we need to progress step by step.

The first impulse from low 10004 needs to complete above 10710 for confirmation of big reversal.

For short term/Intarday: – Nifty is still in positive zone and expected to bounce further. But inner waves are already extended so we can see a small or big decline very soon. Decline can be of 120-180 points [23%-38% retracement of wave (c or 3)] or towards new low below 10004.

10668 is immediate resistance, 10477-10414 is immediate support and 10414 is breakeven point on downside. We can expect a decline of 120-180 points without breaking much higher above 10677. Any bigger fall can be expected after breaking below 10414 only.

We need to keep all these conditions in mind while deciding next trade.

Trading Points of View:

The low risk trading strategies are also the same: –

  1. Nifty if bounce near 10668 then light selling can be done in 10650-10668 range using exact stoploss of 10681 expecting minimum 120-180 points decline. This trade will not be valid if Nifty bounces after touching 10412.
  1. Nifty if decline near 10414 without breaking above 10619 then light buying can be done in 10430-10414 Range (near breakeven point) using exact stoploss of 10399 (some points below 10414) expecting bounce above 10619 in coming days.
  1. Nifty if break and stay below 10414 for 15 minutes then further fall towards 10004 is expected but trade can be decided after seeing the pattern of break down only.

These are low risk trading strategies I can suggest in these conditions. Otherwise traders can plan their own trade based on the conditions explained above.

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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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