Medium Term Outlook of Nifty as on 26 July 2015

| July 26, 2015

Today I prepared Elliott wave analysis report of nifty for medium term and long term as many of my students, subscribers and followers requested it. I was not showing any long term / medium term counts because I don’t have any clear picture which I mentioned in many of my reports but still they are not able to understand. Let me explain through analysis on charts.

Let’s start from daily chart of last 02 years.

Elliott Wave Analysis of Nifty for long term

Elliott Wave Analysis of Nifty for long term

This is daily time bar chart of Nifty covering move after 2013 low of 5118 which I am expecting as start of an impulse where waves 1, 2 and 3 are completed from 5118 to 8996 as shown on charts. Inner wave (5) of 3 is Ending Diagonal Triangle and highly extended.

There is start of wave 4 from 8996 which seems like progressing as Irregular Complex Correction (Triple Zigzag) or Simple Zigzag. Wave 4 already achieved 23% retracement after breaking below 8273 whereas 38% is placed at 7825 which may or may not be achieved. 7940 is the low till now.

We can expect a new bull rally of about 2000 points after completion of wave 4, may be somewhere around 7825 which can be identified only when wave 4 is near to its completion. Or maybe this wave 4 is already completed at 7940.

More detailed calculations and wave counting of this waves are given in below chart which I analyzed 02 months back on 22 May 2015. Please have a look.

Elliott Wave Analysis of Nifty for long term

Elliott Wave Analysis of Nifty for long term

Now, we need to have a look on wave (4) separately to see if it is completed or still have the possibility of new low.

Elliott Wave Analysis of Nifty for medium term

Elliott Wave Analysis of Nifty for medium term

This is again daily time bar chart of Nifty covering move after Jan 2015 high 8996 which I am expecting as start of wave (4). This wave may be completed at 7940 as simple zigzag (abc) if wave (3) completed at 9117 instead of 8996 and 5 may have started for new high.

But, there are wave structures which show the possibilities of Complex Irregular Correction (Triple Zigzag) we should not ignore. These are:

  1. The wave structure of the move from 8996 -8470 -9117 seems like corrective (Irregular Correction) as bounce from 8470 -9117 looks like (abc) rather than an impulse and same I had predicted on 04 March 2015 when Nifty touched new high 9117 after RBI rate cut and expected Nifty to fall sharply below 8273. Read this report: Nifty Elliott Wave Analysis after RBI Rate Cut on 04 March
  1. The wave structure at the bottom is again looks like upside Irregular Correction instead of Impulse as shown on chart marked within circle which shows the possibility of new low again.

 Based on these conditions, most probable counts can be seen as I shown on charts. The upward impulse started from 7940 may be inner wave (C) of (X2) to complete near 8845 or already completed at 8655 and we can see last (abc) to break below 7940 again. Or maybe this wave 4 is already completed from 9117 to 7940 as simple zigzag and 5 is already started and progressing bounce after 7940 may be inner wave 1 of (5).

Conclusion of this chart:

There are two possibilities from the move after 8996.

  1. Either is progress of Irregular Complex Correction (Triple Zigzag) and we can see decline below 7940 once before next bull rally?
  1. Or Wave 4 already completed at 7940 and wave 5 has already started.

As there is no clarity within wave (4), we need to concentrate on move after 7940 to find further short term trend till we identify any clear pattern on medium term chart.   Let’s move to the waves after June low 7940.

Elliott Wave Analysis of Nifty for short term

Elliott Wave Analysis of Nifty for short term

This is 30 minutes time bar chart of Nifty covering move after June 2015 low of 7940 which I am expecting as the start of impulse.

This move seems impulsive where wave 3 completed at 8497 followed by wave 4 as Irregular Correction which completed at 8315. And later bounce from 8315 may be wave 5 in progress or completed at 8655.

61% projection of wave 5 at 8659 is almost achieved. Wave 4 we are seeing as Irregular Correction which is known for more bullishness. Thus, wave 5 has good possibilities to be extended above 61% if it is not already completed. 61% placed at 8659, 70% placed at 8701 and 100% placed at 8872.

We need to analyze bounce from 09 July’s high 8315 on separate 15 minutes chart to see if wave 5 is completed or not.

Elliott Wave Analysis of Nifty for short term

Elliott Wave Analysis of Nifty for short term

This is 15 minutes time bar chart of Nifty covering move after 09 July’s low  8315 which I am expecting as completion of wave 4 and start of wave 5 which suggests.

  1. It may be wave (1) completed from 8315 to 8472
  2. Followed by wave (2) may be completed at 8425 or 8440 (if Irregular) which doesn’t make any big difference was wave 3 is below 161% in both cases.
  3. And maybe it is wave (3) completed from 8425 to 8655 which is less than 161% of (1), thus wave (3) is not extended. (Earlier I was expecting wave (3) completed at 8642 and (4) completed at 8499 and wave (5) needs to be extended in this case as wave (3) was not extended. But, Nifty corrected from 8655 whereas 61% projection of wave (5) was at 8701. So maybe it is just wave (3) which completed at 8655 or maybe I am not able to identify a clear pattern.
  4. The decline from 8655 may be progress of wave (4) and we can see extended wave 5 upwards to break above 8655 again after completion of this wave 4.

These counts will be negated if Nifty even touches 8471 as wave (4) can not overlap wave (2) within complete impulse.

Conclusion:

Nifty charts are suggesting that completion of an impulse (5 waves move) started from 7940 is near, it is already completed at 8655 or may end somewhere above 8701 and we can see minimum.

We can see a sharp decline below 7940 if this impulse started from 7940 is inner wave (c) of (X2) as shown on 3rd chart. Or we can see a 38% -61% corrections (decline) of this impulse if this impulse is inner wave (1) of bigger (5) as shown on 1st chart. Thus a decline (either big or small) is expected in both cases, so we can take short positions after identifying the completion of this impulse, and further progress of decline will suggest if it is going below 7940 or just 38% -61%.

For short term, there are possibilities to see a high above 8655 again if Nifty failed to fall sharply tomorrow as the structure of decline from 8655 look like corrective till now because of overlapping of waves and it needs to be impulsive to show good correction.

For tomorrow, Nifty can be bought only if it trades above tomorrow’s opening price after 9:31 AM with stoploss of low registered till 9:30 AM and targets above 8580 -8655 can be expected. Nifty trading below opening price after 9:30 AM will be sign of weakness.

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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"