Medium Term Elliott Wave Analysis of Nifty dated 10 Dec 2014

| December 9, 2014

Nifty continued decline today and fell another 100 points from yesterday’s close which also signaled reasonable correction in near term. I was expecting Nifty to hold 8353 which is broken today and now we need to step backward and see one step longer time frame chart to explore further probabilities.

Let us see daily chart.

Elliott Wave Analysis Report of Nifty

Elliott Wave Analysis Report of Nifty

This is daily time bar chart of Nifty covering move after June low of 7118. I was expecting it as start of wave 5 (of whole move started from 5933) progressing as Ending Diagonal Triangle. Based on this pattern only I predicted Nifty to show 8380 (Report:  Nifty can Show 8380 before breaking below 7723) when Nifty was at 7800 in Oct.

Read Elliott Wave Analysis of Nifty for All time Frames Dated 18 Oct 2014 to see all time frames EW counts of Nifty and to know why I am taking 7118 as start of wave 5 progressing as Ending Diagonal Triangle.

Let me explain this analyzed Chart once again:

  • Wave (1) is an “abc” move 7118 to 7809
  • Wave (2) is an “abc” correction from 7809 to 7422
  • Wave (3) is again an “abc” move from 7422 to 8180 which is just 110% of wave 1 (less than 161% and not extended). Thus we can expect more than 61% extension for wave (5)
  • Wave (4) was complex correction (triple zigzag) from 8180 to 7724
  • Wave (5) started from 7724 and already achieved its minimum extension of 61% (extended 5th wave).

Now,

Wave (5) of Ending Diagonal Triangle should also be an “abc” move but I am not able to identify 3 wave’s (abc) pattern in move from 7724 to 8626 and it seems an Impulse (5 wave’s move) rather than “abc”.

So, we can expect this whole impulsive move from 7724-8626 as inner wave (a) of (5) followed by downwards wave (b) is in progress and followed by wave (c) upwards is pending.

Now within wave (5) of ED started from 7724: –

  • Wave (a) completed from 7724-8626
  • Wave (b) downwards started from 8626 which is in progress and already declined 300 points from high. Exactly we cannot say how much wave (b) will correct but we can say its maximum limit downwards. Generally, any part of an Ending Diagonal Triangle shouldn’t break below its lower line (line joining wave 2 and 4). So we can expect maximum possible lower levels for wave (b) till lower line of ED (lower red line). Normally we can expect wave (b) as 61% of (a) but not compulsory, it may be less or more.

Let us see the progress of wave (b) of (5) closely on chart:

Elliott Wave Analysis Report of Nifty

Elliott Wave Analysis Report of Nifty

This is 5 minutes time bar chart of Nifty covering move after high of 8626 and showing the decline. The move from high 8626 to today’s low 8330 can be identify as wave 1, 2 and 3 as 2nd down leg (8587-8330) declined more than 238% of   1st down leg (8626-8526).

And if it is wave 1, 2 and 3 then it can be progress of wave “a” of correction where inner waves 4 upwards and 5 downwards of “a” are still pending. Or it may be (abc) with highly extended wave “c”. Or it may take any complex shape.  The exact formation can only be identified after seeing some bounce and then nature of that bounce. We need to wait till we see any bounce.

Trading Strategy:

We already missed the train and now we need to wait for any bounce to identify next trading opportunity. The 2nd fall seems like wave 3 and it is not wise to predict the end of wave 3. On the other hand, wave 3 already extended more than 238% of 1 so it is not wise to sell at lower levels.

So, I would like to wait for any bounce and will try to identify the nature of that bounce to further identify if that bounce is wave 4 or something else. There is no safe trading opportunity at present and we need to wait for some bounce.

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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"

Comments (3)

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  1. Deepak Kumar says:

    Dear Dharamarajan Ji.

    The wave 5 I mentioned till 8631-8804 was inner wave 5 of lower degree wave (a) that started from 7724 and is already completed at 8626 just short of 38% but it was valid as it went above wave 3 of that impulse.

    But wave 5 I mentioned in this article is wave 5 of bigger wave started from 7118 in June.

  2. Dharmarajan Ananthanarayanan says:

    Dear Mr. Deepak,

    I’ve read couple of articles on Nifty counts. In one, you have mentioned wave 5 can be done with 8631-8804. Now Nifty has done 8627 and the fall has been to 7961, which I believe now coincides with the read line you have drawn to (b), so are we to come to conclusion wave 5 is over and will this confirmation be done once it break below (b) and closes?

    Now just to understand, could you please advise if 5 is not over at 8627 and still has room to 8804, how to we know the timeframe and the maximum upside? And is this (5) the same as bigger 5? If you could please help in explaining. Thanks for your time.