Long Term and Short Term Elliott Wave Analysis of Nifty as on 10 Aug 2015

| August 10, 2015

Nifty opened mild Gap Up today at 8577 and bounced sharply till 8621 in first hour of trade. Nifty consolidated in 8620-8600 range for more than couple of hours followed by a sharp downward jerk of 100 points in just 10 minutes before closing 39 points down at 8525 after registering day’s low of 8497. Let me explain probable wave counts on latest charts.

Let’s have a fresh look on daily chart again.

Long Term Elliott Wave Counts of Nifty

Long Term Elliott Wave Counts of Nifty

This is daily time bar chart of Nifty covering move after 8996 which I am expecting as start of inner wave (4) of impulse started from 5118 in 2013 (Explained in previous report: Medium Term Outlook of Nifty as on 26 July 2015)  . There I shown possibilities of Triple Zigzag formation which I also explained in many of my previous reports. If we see its inner waves then it seems:

  1. First ABC cycle completed from 8996-8470.
  2. First link wave (X1) completed from 8470-9117 as Upside Irregular Corrective (abc) wave.
  3. Second ABC cycle completed from 9117-7997.
  4. Previously we assumed that wave (X2) may be completed at 8655 but Nifty broke the upper line of wedge today. So, either wave (X2) is not completed and may complete somewhere else above 8655.
  5. Third and last ABC cycle needs to go below 7940 if this whole pattern is really at Triple zigzag otherwise there may be reasonable correction of 38% to 61% before achieving new high.  I will update if I identify any reversal for big down move or formation of any bullish pattern.

Possibilities of Triple Zigzag and break below 7940 are still there even if Nifty touches 8845. So, still there is no confident condition for any positional longs.

Confusing Observations:

The wave started from 7940 which we are expecting as inner wave (c) of bigger wave (X2) should be an impulse but there is some complexion as waves are overlapping at top. So, maybe there is formation of an Ending Diagonal at top or it is a part of downward corrective wave which I can’t identify clearly yet.

If we look at last downwards wave hitting 2015 low 7940, it looks like (abc or corrective). So, there are possibilities for new low below 7940 in future. Not necessary that whatever we are seeing is correct but we should not ignore the possibilities and must be cautious.

Conclusion for Long Term:  

So, there is no confident condition for positional longs as possibilities of a low below 7940 are still there. Though, we can trade for short term and intraday bounces but any positional longs should be taken with caution till we find any bullish pattern. Even if the pattern at bottom (7940) is not Irregular Correction, bounce after 7940 till now seems impulsive so we can expect a 38% -61% correction of whole move from 7940 to high before any further bigger up move.

Let’s have a look on move after 28 July low 8321:

Short Term Elliott Wave Counts of Nifty

Short Term Elliott Wave Counts of Nifty

This is 30 minutes time bar chart of Nifty covering move after 28 July low 8321. It seems an impulse is completed from 8321 to 8606 (or 8621 in case of Irregular Correction at top) as shown on chart. Wave 4 retraced more than 38% and wave 5 is extended (more than 61%).

If I am right at identifying the pattern then there may be 38%-61% retracement of whole impulse started from 8321-8606 or 8621. Nifty already achieved 38% today after breaking below 8506 whereas 61% is placed at 8435.

The fall from today’s top 8621 is sharp which sometimes is an inner wave (c) of Irregular Correction. In this case, Nifty can rise above 8621 again after completion of this wave (c).

Let’s have a look at today’s fall on separate 5 minutes chart:

Short Term Elliott Wave Counts of Nifty

Short Term Elliott Wave Counts of Nifty

This is 5 minutes time bar chart of Nifty covering move after today’s high 8621. The move from top seems impulsive and by seeing the personality of move, it seems inner wave (3) completed at 8497 and 5 downwards may be pending which can project 38%-61% placed at 8480-8451 if Nifty failed to break above 8528.

Many times, consolidation followed by sharp decline is the personality of wave (c), Nifty can bounce sharply from here also in this case.   Trading strategy in both the case I have explained in conclusion.

Conclusion:

By looking at long term chart, there is still a possibility for new low below 7940 or a 38%-61% correction of whole bounce after 7940 in near future so conditions are not favorable for positional longs yet. Short term bounces can be there so trades on long term must be Intraday or short term only.

An impulse seems completed from 8321-(8606 or 8621) as explained above, which can show correction of 38%-61% (also mentioned in yesterday report). Nifty has already shown 38% correction. We are not confident if today’s decline completed the correction or not so hint can be taken from tomorrow’s opening price.

Tomorrow, Nifty can be bought only if it trades above tomorrow’s opening price at 9:31 AM using Stoploss of day’s low till 9:30 otherwise Nifty can shown lower levels till 8480-8435. Stoploss for Intraday Sell should be days high till 9:30 only if Nifty trades below opening price at 9:31 AM. Overall, we can see small or big bounce from lows after completion of this downward impulse.

Focus only on Intraday and Short term trades and always book part profit or trail stoploss as conditions are not clear for any positional buy or sell.

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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"