Further Elliott Wave Analysis Updates of Nifty for 22 May 2018 Onward

| May 21, 2018

Nifty opened mild higher at 10616, registered high 10621 but failed to sustain at higher levels and traded with negative bias for rest of the day. Nifty declined further by about 90 points to register day’s low 10505 and finally closed 79 points up at 10516.

Yesterday, 10636-10665 was immediate upside resistance and one more decline was expected without breaking above 10665. And further, I advised to wait for today’s move to see if 10559 breaks or not and with which pattern.

Trading strategy was to hold Nifty 10800 Call of May expiry with stoploss till further update and fresh Intraday shorts were suggested on bounce towards 10650-10665 with exact stoploss of 10671. Nifty declined further to break below 10559 and registered low 10505 but trade was not activated as Nifty declined without touching 10650. Now, let’s have a fresh look at latest charts for further scenario.

Today I am covering decline after all time high 11171 and earlier wave counts are explained in my last All Time Frames analysis report Nifty is Still Bullish for Medium and Long Term – Fresh EW Analysis on All Time Frames

Elliott wave counts of nifty on daily chart

Elliott wave counts of nifty on daily chart

This is daily time bar chart of Nifty covering decline from all time high 11171 which I had marked as end of inner wave (b) of {iv of 3 of [v] of [3] of (iii) of (3)} on larger time frame. This is the same chart with explanation which I posted in my last analysis report because there is no major change in wave counts on this chart.

It seems an impulse completed from 11171-9951. If this impulse is really wave (c) of Irregular correction then next impulse started from 9951 needs to complete above 11171 but if I am wrong at identifying and this impulse is wave (a) or (1) then 61% retraced of this impulse is already achieved after breaking above 10704.

There is bit confusion in overall pattern, so we need to concentrate on progress of bounce started from 9951 to calculate immediate further moves.

Elliott wave counts of nifty on hourly chart

Elliott wave counts of nifty on hourly chart

This is 1 Hour time bar chart of Nifty covering bounce after low 9951 which I am analyzing independently. Again, I am not able to conclude any confident pattern within this move because of steep rise without any reasonable correction but whatever I could understand I tried to explain on this chart.

It seems wave (A or 1) completed from 9951-10229, wave (B or 2) completed from 10229-10111 as Irregular Correction and wave (C or 3) may be completed at 10929.

38% retracement of wave (C or 3) was already broken after breaking below 10616. So, I calculate 38%-61% retracement of whole bounce (from 9950-10929) for reference. 38%-61% retracement of this whole bounce is placed at 10555-10324 where Nifty registered low 10505.

Overall, we need to wait for clarity on this chart. So we need to analyze the decline started from 10929 to check its pattern and to calculate immediate moves.

Elliott wave counts of nifty on 15 minute chart

Elliott wave counts of nifty on 15 minute chart

This is 15 minute time Bar chart of Nifty covering declined from latest high 10929 which I am expecting as completion of wave (c or 3).

There is change in wave counts on this chart because wave (5) based on previous wave counts projected almost 123% which is a rare case, so the wave which I was expecting as wave (5) may be  wave (c) of (3). So, according to fresh wave counts: –

It seems wave (a or 1) completed from 10929-10699, wave (b or 2) completed from 10699-10789 which retraced just 38% and wave (c or 3) may be in progress from 10789. Wave (c or 3) achieved exactly 123% projection after touching 10505 and next 161% projection is placed at 10324 which may or may not be achieved.

Within wave (c or 3), it seems inner wave (i), (ii), (iii), (iv) is already completed and (v) may be in progress. Wave (v) achieved minimum 38% projection after breaking below 10534 and next 61%-100% projection is placed at 10482-10398 which may or may not be achieved.

23%-38% retracement of wave (c or 3) is placed at 10572-10613 which is immediate resistance on upside and 10613 is breakeven point above which any reversal can be expected.

10619 [start of wave (iv) of (c or 3)] is reflex point in these conditions. So, Nifty needs to complete a sharp impulsive wave above 10619 for confirmation of bigger upside reversal.

Conclusion

For long term, Nifty is still bullish and has long way to go as explained in my last “All Time Frames” report but we are not sure if bottom is already made or still pending. Nifty can bounce from present levels also and Maximum estimated bottom range is 9800-9600 based on Fibonacci retracements.

For short term, Nifty is in negative zone as Nifty trading below breakeven point and pattern of last wave started from 10619 doesn’t seems completed yet. 10572-10613 is immediate resistance and 10613 is breakeven point on upside. Any reversal can be expected after break above 10613 only.

On the other hand, 10619 [start of wave (iv) of (c or 3)] is reflex point in these conditions. So, Nifty needs to complete a sharp impulsive wave above 10619 for confirmation of bigger upside reversal.

On downside, there is no particular downward target because minimum projection is already achieved. 10482-10398 is indicative range which may or may not be achieved. We need to wait for some bounce [23%-38% retracement of wave (c or 3)] to calculate next levels.

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

Trading Points of View:

10800 Call of May Expiry in 26-27 range is trading around 9 (loss of 20 points) and pattern based on which this trade was initiated is negated. This trade was taken against the trend expecting extended wave (5) because extended wave (5) retraces 100% with speed but I was wrong at identifying, and the wave I was expecting as wave (5) is something else, may be wave (c or 3).

Extended wave 5 indicates sharp bounce but now we can’t say how much time it will take even if it bounces and expiry is just 7 days above.

So, note tomorrow’s opening point and wait for 9:45 AM tomorrow. Nifty if trades above tomorrow’s opening price at 9:45 AM (30 minutes after opening) then hold this trade with stoploss of day’s low (low made till 9:45 AM) for intraday and hold for next day only if Nifty closes near high of the day. Otherwise exit the trade if conditions doesn’t fulfill. Or one can hold the trade till Expiry on his own wish if want to take chance.

Nifty is in negative zone but we can’t take fresh shorts because pattern already achieved minimum requirements, we need to wait for formation of upside corrective pattern to plan fresh shorts. Even we can’t Buy Nifty at this point because Nifty closed near low of the day without giving any indication of reversal.

We just have upside resistance at 10572-10613 and there is possibility of bounce towards this resistance but we don’t have entry levels and stoploss for longs. So, I would like to wait for tomorrow’s move to decide any fresh trade, 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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