EW Analysis and Outlook of Nifty for 16 Aug 2018 Onward

| August 15, 2018

Nifty opened bit higher at 11381, registered low 11370 but bounced back by more than 90 points to register day’s high 11452 and closed 79 points up at 11435.

Yesterday, there was a possibility of decline towards support range 11273-11136 in coming days with 11365 as immediate resistance and upside breakeven point. For Intraday, minimum bounce towards 11406-11419 was expected if Nifty managed to trade above 11365 for 15 minutes, otherwise one more decline towards 11340-11310 was possible.

Trading strategy was to buy Nifty Intraday if trades above 11365 continuously for 15 minutes using small stoploss of 11349 expecting 11406-11419 as minimum Intraday Targets. Nifty broke above breakeven point 11365 and achieved Intraday Targets but without giving chance to buy at lower levels. Now, let’s have a fresh look at latest charts for further scenario.

This analysis report is covering move after 9951 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 of nifty for 16 Aug 2018

Elliott Wave analysis of nifty for 16 Aug 2018

This is daily time bar chart of Nifty covering bounce after low 9951 which I marked as start of wave ‘v’ on daily chart in my last “All Time Frames” Report. There is no change in wave counts on this chart.It seems, wave (1) completed from 9951-10929, (2) may be completed from 10929-10417 and wave (3) may be in progress from 10417.

And within wave (3), it seems inner wave (i) of (3) completed from 10417-10893 (pattern not clear), (ii) completed at 10557 as Double Zigzag correction and wave (iii) may be completed at 11495 or still in progress.

23%-38% retracement of progress of wave (iii) is placed at 11273-11136. So, 11273-11136 is still fresh medium term support and 11136 is medium term breakeven point. Any bigger reversal can be expected after break below 11136 only. Nifty achieved 11340 till now.

Now, we need to analyze the moves after all time high 11495 to check its pattern.

Elliott Wave analysis of nifty for 16 Aug 2018

Elliott Wave analysis of nifty for 16 Aug 2018

This is 15 minutes time bar chart of Nifty covering the move after all time high 11495 which I am expecting as a start of small or big correction.

It seems a (ABC) correction completed from 11495-11340 as Simple Zigzag with wave (A) completed from 11495-11465, wave (B) completed from 11465-11490 as Irregular Correction, (C) may completed from 11490-11340 and new upside wave started from 11340.

Earlier I was marking this decline from 11495-11340 as wave (1), (2), (3) but wave (3) retraced deeper than 38% in this case, so now I marked the same move as (ABC) rather than 123.

The bounce after 11340 is also a 3 wave’s move till now and same can be marked as wave (a or 1) completed from 11340-11406, wave (b or 2) completed from 11406-11350 and wave (c or 3) may be completed at 11452 or still in progress.

23%-38% retracement of progress of wave (c or 3) is placed at 11427-11413. So, 11427-11413 is immediate support range and 11413 is breakeven point on downside. Nifty if trades below 11413 for 15 minutes can decline further towards 11350-11340.

Conclusion

For long/medium term,

Same as I explained in my all time frames report, Outlook for medium/long term is still bullish because Nifty is within the middle of wave (3) on largest wave cycle and there is Irregular Correction at top. Nifty has long way to go with occasional corrections (maximum 23%-38% corrections with 9918 as breakeven point and 8968 as pattern negation point). Nifty may not break below 8968 in any case in coming years before competition of larger wave cycle.  We need to revise whole wave counts if Nifty ever broke below 8968.

For Short Term,

11273-11136 is still short term support and decline towards this support can be expected in coming day with a corrective pattern. 11136 is breakeven point and any bigger reversal can be expected after break below 11136 only. Nifty achieved low 11340.

For intraday/very short term, 11427-11413 is immediate support range and 11413 is immediate breakeven point on downside. Nifty if breaks and trades below 11413 for 15 minutes can decline further towards 11350-11340 otherwise a bounce for new all time high is possible.

This immediate breakeven point 11413 will change if Nifty bounce above 11452. Fresh breakeven point will be 38% retracement of total move from 11350 to fresh high [wave (c or 3)] if Nifty moves above 11452. We need to act according to fresh breakeven point in such case.

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

Trading Points of View:

There is no change in short/medium term trading strategy yet: –

Overall, Nifty is in very bullish zone because inner wave (iii) of (3) is in progress on daily chart. So, our main strategy must be “Buying on Corrections” in support range. We can think of selling Nifty only after identifying any confident bearish/reversal pattern on smaller time frame.

  1. So, Nifty if complete a corrective pattern around medium term support range 11273-11136, then it will be a good buying opportunity for bounce above 11495. But support range 11273-11136 is big, so we can plan low risk trade after seeing the pattern of decline towards is range only. We can just wait right now.
  1. On the other side, possibility of a decline towards support 11273-11136 is there but we need to wait for completion of downward Impulse (started from 11495) followed by upside correction to sell with low risk. The downward impulse will be wave (a), upside correction will be wave (b) and we can trade for fast and sharp wave (c) downside. I am not able to identify any downward Impulse yet, the decline from 11495-11340 looks corrective.

For Intraday/very short term: –

Nifty if trades below immediate breakeven point 11413 continuously for 15 minutes then it can be sold on bounce in 11413-11427 range using stoploss of 11437 expecting 11350-11340 as minimum downside target. Modify stoploss to cost after seeing 33 points profit and hold for next day only if Nifty closes near low of the day. Act according to fresh breakeven point if Nifty bounces above 11452 (explained in conclusion).

Those who are already holding any longs can used 11407 (some points below 11413) as trailing stoploss but it is better to wait for any fresh buying at this point.

These are low risk and most probable trading strategies I can suggest in such conditions. Otherwise, traders can plan their own trades 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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