Fresh EW Counts and Outlook of Nifty for 09 July 2018 Onward

| July 8, 2018

Nifty opened lower at 10744, registered low 10735 but bounced back by about 80 points from day’s low to register day’s high 10816 and closed 22 points down at 10772.

Friday, Nifty was in very complex type of pattern but one bounce towards 10795-10837 range was expected with 10726 as breakeven point on downside.

Trading strategy was to hold existing longs or buy fresh if get in 10742-10726 range using exact stoploss of 10715 (some points below 10726) expecting bounce towards 10795-10837. Nifty decline till 10735 and bounced by 80 points till 10816, trade was activate and minimum target was achieved. 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.

Nifty wave counts on daily chart

Nifty wave counts on daily chart

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 in wave counts on this chart.

It seems wave (1) completed from 9951-10229, wave (2) completed from 10229-10111 as Irregular Correction and wave (3) may be completed at 10929, wave (4) may be completed at 10417 as Simple Zigzag and wave (5) may be in progress. [Wave (4) retraced deeper than 38%).

Minimum 38%-61% projection for wave (5) is placed at 10790-11021 but end of wave (3) is 10929. So, 10929-11021 is minimum target range on upside in this case.

Nifty can decline below 10417 only if wave (4) turns into Complex Correction (Double Zigzag or Triple Zigzag) otherwise Nifty is heading for high above 10929 again. And we can get clue of next possibility by analyzing the progress of wave (5) started from 10417.

So, let’s analyze the progress of expected wave (5) started from 10417 on lowest possible time frame chart to check its pattern closely.

Nifty wave counts on hourly chart

Nifty wave counts on hourly chart

This is hourly time bar chart of Nifty covering bounce from 10417 which I have marked as start of wave (5) on 5 hourly chart. There is change in wave counts.

There is an [abc] bounce from 10417-10893 followed by a progress of Complex correction (Double Zigzag) from 10893-10557.

So, there is possibility of Ending Diagonal Triangle in progress with inner wave [i] of ED from 10417-10893, [ii] from 10893-10557 as Double Zigzag correction and wave [iii] of ED may be in progress. Wave [ii] retraced deeper than 61% and corrected till the start of inner wave [a] of [i].

So, normal 100%-123% projection for wave [iii] is placed at 11033-11145 and same is minimum target range for wave [iii] if I am right at identifying the formation of ED and inner wave [ii] of ED is really completed at 10557.

Otherwise we can see one more down leg for low below 10557 [as 3rd (abc) cycle] if this wave [ii] turns into Triple Zigzag correction. This possibility will get negated after break above 10837 [end of wave (X)].

Other Possibility: – May be the whole decline started from 10929 progressing as Complex Correction (Double Zigzag or Triple Zigzag) and Nifty needs to decline below 10417 to complete this Complex Correction. Nifty can bounce above 10929 again but after completing the correction below 10417 in this case. This is just a rare case but possible at this point of time.

Now, the charts are indicating that a Double Zigzag Correction is completed from 10893-10557 and new upside wave started from 10557. So, let’s analyze the bounce started from 10557 to identify further immediate move.

Nifty wave counts on 15 minutes chart

Nifty wave counts on 15 minutes chart

This is 15 minute time bar chart of Nifty covering bounce from 10557 which I am expecting as start of inner wave [iii] of ED or inner wave (X)2 of Triple Zigzag. Both these wave must be a (abc) move.

There is no change in wave counts yet and pattern is progressing as per expectations, it seems an impulse completed from 10557-10708 which can be marked as wave [a or 1]. Wave [b or 2] may be completed from 10708-10605 as Irregular Correction which retraced by more than 61% and wave [c or 3] may be in progress from 10605. Wave [3] already projected by more than 123%, so need to concentrate on its pattern now.

Within wave [c or 3], it seems inner wave (i) completed from 10604-10672 and wave (ii) may be completed from 10708-10630 and wave (iii) may be still in progress from 10630. Wave (iii) seems within in its wave 4 or 5.

Normal 23%-38% retracement of progress of wave (iii) of [c or 3] is placed at 10770-10744. So, 10770-10744 is immediate support range on downside and 10744 is immediate breakeven point below which we can think of any downward reversal. Nifty already entered in support range.

The decline from 10816-10761 looks like an Irregular correction which is already completed or very near to completion and already entered in support range. So, we can expect minimum 70-104 points [38%-61% projection for wave (v)] bounce from 10761-10744 range without breaking much lower below 10744.

Nifty if breaks and trade below breakeven point 10744 for 15 minutes then further decline towards 10605-10557 can be expected.

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,

Nifty already achieved expected 10795-10837 range but pattern doesn’t seem completed and the decline from top 10816 looks like an Irregular Correction which is already completed at 10761 or very near to completion.

So, there is possibility of one more bounce towards 10816 and above, may be 70-104 points from fresh low/turning point. The bounce is expected to extend towards 11033-11145 also but we needs to proceed step by step because pattern is very complex.

10770-10744 is immediate support range on downside and 10744 is immediate breakeven point and Nifty if breaks and trade below 10744 for 15 minutes will open the possibility of further decline towards 10605-10557 range. Same 10744 can be referred as stoploss for longs.

We need to keep all these conditions in mind.

Trading Points of View:

According to fresh conditions on charts: –

There is possibility of more bounce for high above 10816 as pattern doesn’t seems completed, so our trading strategy must be “buying on dips” or holding longs with trailing stoploss until the stoploss get triggered or until we get signs of completion of pattern.

Those who are holding existing longs can use 10733 (some points below 10744) as trailing stoploss expecting one more high above 10816. Bounce can be of minimum 70-104 points from fresh low/turning point.

Fresh Trade: –

  1. Nifty if get in 10770-10744 range then fresh buying can be done using stoploss of 10733 expecting 70-104 points bounce from fresh low/turning point.

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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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