Further Elliott Wave Updates of Nifty after Break Below 7916

| December 27, 2016

Nifty opened mild gap down at 7965 but declined sharply just after opening and traded with negative bias for rest of the day. Nifty declined more than 80 points before closing 77 points down at 7908.

Yesterday, one more decline towards 7942-7932 was expected and then suggested to buy Nifty in 7942-7932 range using exact stoploss of 7915. Nifty declined till expected range but failed to bounce back and further declined below 7915 triggering the stoploss. The possibility of Irregular Pattern we were expecting is also negated after touch of 7915. Let’s have a fresh look at latest charts for further scenario.

So, today I am covering declining from 07 Sep 2016 high 8968 to see if we can identify some change in wave counts for medium term. And previous wave counts are explained in my all time frames report Elliott Wave Counts of Nifty for All Time Frames as on 18 July 2016.

Elliott Wave Counts on Nifty on daily chart

Elliott Wave Counts on Nifty on daily chart

This is daily time bar chart of Nifty covering decline from 07 Sep 2016. I am not counting any internal waves with in this whole decline because it is difficult to identify inner waves because of very sharp decline of about 600 points in a single session. But I am just covering this chart to get some hints by using Fibonacci Calculations.

Casually, there is a big wave completed from 8968-8002 followed by a bounce of 61% from 8002-8598. And there is a next down wave started from 8598 which breached previous low of 8002.

So, if we assume the first decline from 8968-8002 as wave (A) and 61% bounce from 8002-8598 as wave (B) then minimum 61% projection for wave (C) is placed at 8001 which is already achieved and next 100%-123% projection is placed at 7632-7404. These are just casual levels to keep in mind if an internal wave supports it.

Now, let’s analyze the decline from 8598 separately on lowest possible time frame chart.

Elliott Wave Counts on Nifty on houlry chart

Elliott Wave Counts on Nifty on houlry chart

This is hourly time bar chart of Nifty covering decline from 10 Nov 2016 high 8598 which I have marked as start of wave (C) on daily chart.

By looking casually and by keeping the personalities of waves in mind, it seems waves (1), (2), (3), (4) are completed and wave (5) is in progress of 8274. [I am unable to identify exact pattern of wave (4)].

Minimum 38%-61% projection of wave (5) is placed at 8013-7852 and next 100% projection is placed at 7592. Minimum 38% projection is already achieved and (5) will be extended after achieving 61% projection at 7852. So, there will be possibilities of sharp reversal towards 8274 again if Nifty breaks below 7852.

Now, let’s have a separate look at decline from 8274 again to analyse the progress of wave (5) marked on Hourly Chart.

Elliott Wave Counts on Nifty on 15 minutes chart

Elliott Wave Counts on Nifty on 15 minutes chart

This is 15 minutes time bar chart of Nifty covering decline from 9 Dec high 8274.

By Casual look, It seems waves (1), (2), (3), (4) are completed and wave (5) is in progress from 8110. 100% projection for wave (5) is already achieved after break of 7898 and wave (5) is already highly extended.

Important Observation: Wave (3) is very slow in this case and wave (5) is already extended. So, reversal has to be very sharp if reversal has to happen otherwise the wave counts I am showing are not correct.

And within wave (5), it again seem that inner waves (i), (ii), (iii), (iv) are complete and last wave (v) is in progress. Inner wave (v) of (5) also achieved 61% projection and is extended whereas next 100% projection is placed at 7877.

Now, let’s go deeper and analyze the last decline from 8002 separately on lowest possible time frame separately to get very short term scenario which I have marked the start of inner wave (v) of (5) on 15 minutes chart.

Elliott Wave Counts on Nifty on 5 minutes chart

Elliott Wave Counts on Nifty on 5 minutes chart

This is 5 minutes time bar chart of Nifty covering decline from 8002 which I have marked the start of inner wave (v) of (5) on 15 minutes chart.

It again seems that inner waves (1), (2), (3), (4) are completed and wave (5) is in progress from 7938. Minimum 38%-61% projection for wave (5) is placed at 7888-7858.

For intraday, 7920 is end of very inner wave 1 with very last decline from 7938. SO, 7920 can be referred as breakeven points for Intraday.

Conclusion:

The possibility of Irregular Correction pattern we were expecting was negated yesterday after break of 7915, I was wrong in identifying the pattern. Now, if I look at whole decline from 8968 then it seems some sort of wave (5) started 8274 which already achieved is minimum requirement and this wave (5) will be in extended zone after break below 7852.

So, for medium term, if reversal have to happen then reversal must be sharp because there are indications of progress of wave (5) on all the covered time frames and all the inner waves (5) are extended.

And further, the last declined from 8274 started slowly and gaining speed as it is progressing, this type of pattern we mostly see within wave C or 5 where it reverse sharply making PIN BAR type of reversal but it is not safe to calculate the bottom because last sharp decline before reversal is mostly larger and severe.

For Intraday/Very short term, 7888-7858 is the range from where we can expect a small or big bounce and 7920 is the breakeven point for intraday above which we can expect some more bounce.

For Trading Point of View:

The overall medium term pattern is making base for a good reversal but we can witness very wild move before reversal. Even reversal can be fast and sudden if has to happen and may not give chance to buy. Nifty is at the range where there is possibility of good recovery but downward risk is also high. So, any medium term trade must be hedged in these conditions.

For short term/Intraday:

7888-7858 is the range where we can witness a small or big reversal and 7920 is the breakeven point for the day but overall Nifty is in the conditions where small stop losses may trigger. So, safe trading strategies are: –

  1. Buy Nifty only if “Nifty trades above opening price at 9:31 AM” and “breaks above 7920 without breaking low made till 9:31 AM” (both conditions must fulfill). Use stoploss of day’s low made till 9:31 AM and manage trade with trailing stoploss.
  1. On lower side, Nifty has possibility to bounce from 7888-7858 range (small or big) but trade can be decided only once Nifty achieves 7888-7858 range during market hours. Experienced trader can use this range for trade if conditions favors.

Trade in very light quantity because there is uncertainty in wave counts and market conditions.

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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"