Further Outlook and Trading Strategy of Nifty for 07 Jan 2019

| January 6, 2019

Nifty opened bit higher at 10699, bounced to register day’s high 10736 and declined back by more than 100 points to register day’s low 10628 but bounced back again by more than 110 point to register fresh day’s high 10741 and closed 55 points up at 10727. It was a volatile sessions with repeated swings.

Friday, Nifty was near good support 10692-10682 with a possibility of sharp reversal towards 10814-10923 and bounce can extend even further. 10626 was maximum downside limit before reversal.

Trading strategy was to hold longs or 10800/10900 calls bought in 10692-10682 range using exact stoploss of 10599 expecting sharp bounce towards 10809-10923 which can extend even higher. Nifty tested 10628, bounced sharply and closed at 10727. 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 of nifty for 07 Jan 2018

Elliott wave analysis of nifty for 07 Jan 2018

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 completed at  Irregular Correction at 10004 and wave ‘5’ may be in progress.

Point of Cautions: – The reversal after completion of Irregular Correction is known to be sharp but the bounce after 10004 is slower when compared to the speed of wave (c) of Irregular Correction. So, we need to be cautious for one more low below 10004.

Now, let’s analyse the bounce started from 10004 separately to calculate internal moves.

Elliott wave analysis of nifty for 07 Jan 2018

Elliott wave analysis of nifty for 07 Jan 2018

This is 5 hourly time bar chart of Nifty covering bounce after 10004 which I marked as start of inner wave ‘5’ of [v] on daily chart. There is no change in wave counts on this chart.

Same as I explained in my last analysis report, it seems an impulse completed from 10004-10941 and same can be marked wave (A or 1) but further decline from 10941-10333, bounce from 10333-10985 and decline from 10985-10534 also looks like Impulse which I marked as wave (a or 1), [A or 1] and [a or 1]. Now, very last bounce started from 10534 is also an Impulse and I marked it as A or 1.

And all the upside Impulsive waves retraced about 61%.

But the overall combination of these repeated Impulsive waves is not forming any convincing EW pattern, it can be progress of Double Zigzag Correction or Irregular Correction or any other pattern which I am not able to identify yet. We need to wait for clarity in pattern.

There is lack of confidence in wave counts on this 5 hourly chart because of various factors. So, need to concentrate on bounce started from 10534 until we get clarity.

Elliott wave analysis of nifty for 07 Jan 2018

Elliott wave analysis of nifty for 07 Jan 2018

This is 15 minutes time bar chart of Nifty covering bounce after 10534 which I am analysing independently.

It seems an impulse completed from 10534-10923 as marked on chart but we can’t conclude which impulse this is on higher time frame, so I used alternate wave counts and marked it as A or 1.

So, wave A or 1 may be completed from 10534-10923, wave B or 2 may be completed from 10923-10628 as 3-3-5 Flat Correction and wave C or 3 may be in progress. Normal 100%-123% projection for wave C or 3 is placed at 11071-11108 which is normal expected completion range for wave C or 3.

Inner wave (5) of (c) of B or 2 started from 10814 is highly extended, so there is possibility for sharp bounce towards 10814.

Within C or 2, it seems inner wave (1) completed at 10741, (2) may be completed at 10660 and wave (3) may be in progress. End of wave (2) is 10660 and same can be used as trailing stoploss for longs.

Overall, there is possibility for a bounce towards 11017-11108 in coming days with 10814 as minimum upside target.

Conclusion

For Medium/Long Term: – There was a possibility of Irregular Correction on Daily chart and same was indicating a sharp bounce for new life time high. But the bounce after 10004 is slower when compared to last fall and same is warning cautions for one more low below 10004. So, we need to concentrate on short term outlook until we get clarity in medium term outlook.

For short term: – A 3-3-5 Flat Correction may be completed at 10628 and there is possibility of bounce towards 11017-11108 with 10814 as quick immediate target.

10659 (below 10660) can be used as trailing stoploss for existing longs and this stoploss must be changed to 10740 (below 10741) once Nifty achieve 10814.

We need to look for fresh pattern again if Nifty breaks and stay below 10626. We need to keep all these conditions in mind while deciding next trade.

Trading Points of View:

According to conditions on charts: –

Those who initiated systematic longs or bought 10800-10900 call of Jan 2018 expiry in 10692-10682 range can hold the same using trailing stoploss of 10659 (below 10660) expecting sharp bounce towards 10814-10923 which can further extend towards 11017-11108. Modify stoploss to 10740 after Nifty achieving 10814.

But reminding again, don’t be greedy, trade in comfortable quantity and follow strict stoploss. Don’t lose big in a single trade because stoploss is big.

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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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