NIFTY Analysis, Outlook and Important Levels for 07 Oct 2019

| October 7, 2019

Nifty opened higher at 11388, bounced further to register day’s high 11400 but declined back sharply by more than 240 points to register day’s low 11158 and closed 139 points down at 11174.

Friday, overall 11398-11452 was strong resistance and Nifty was expected to decline below 11271 without breaking higher above 11452. Trading strategy was to Sell Nifty if it enters in resistance 11398-11452 and then breaks below downside breakeven point.

Nifty entered in 11398-11452 range and broke downside breakeven point 11356, later selling was advised in 11360-11374 range with exact stoploss of 11383 for minimum downside target 11286 to “Live Update Subscriber”. Nifty declined below 11286 till 11158 without breaking above 11383 after the update and trade gave 70-90 points profit with risk of 23 points. Further updates with fresh levels and fresh outlook were sent. 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.

This is daily time bar chart of Nifty covering bounce after low 6825 which I marked as start of wave [5] on daily chart in my last “All Time Frames” Report. There is no major change in wave counts on this chart.

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 [iii] of [5] is completed at 11171 and [iv] may be completed at Irregular Correction at 10004 and wave [v] may be in progress. Wave [v] achieved minimum projections after breaking above 11761 whereas next 61% projection is placed at 12689 which may or may not be achieved. Wave [v] achieved 12103 but pattern doesn’t seem completed.

So, let’s analyse the progress of wave 5 started from 10004 separately to calculate internal moves.

This is again daily time bar chart of Nifty covering bounce after 10004 which I marked as start of inner wave [v] of [5] on daily chart.  Again, there is no major change in wave counts on this chart.

The bounce from 10004-12103 is confirmed as (abc) because of overlapping of waves after break below 10985. Earlier we had 02 possibilities for this setup but possibility of Irregular Correction is almost negated because of this big bounce. Now, Ending Diagonal Triangle is most probable pattern for this setup.

Now, the (abc) bounce from 10004-12103 is inner wave (1) of Ending Diagonal Triangle for wave [v]. If this is the case then Nifty can decline towards 10585 to complete wave (2) of ED and later Nifty can bounce slowly with volatility for new high to complete wave (3), (4) and (5) of ED.

Nifty declined almost till 10585 (registered low 11637) and bounced back, so may be wave (2) of ED is already completed at 10637 and wave (3) of ED is started. If wave (3) is started then it will have (abc) pattern, so bounce towards new high will have many volatile up and down moves.

Moreover, if it really ED started from 10004 then next 1-2 years are going to be tough for analysts and traders. Many TA indicators fails to deliver results during Ending Diagonal and this ED will be very big.

But Nifty left a Question Mark at the bottom before this big bounce and same I am going to explain on hourly chart.

So, let have a separate look at move after 10782 on Hourly Time Frame chart.

This is hourly time bar chart of Nifty covering move after 10782 which I marked as start of wave (iv) on daily chart.

The bounce from 10782-11181 is Simple Zigzag (abc) move, thus meeting the requirement of wave (iv). But if we assume wave (iv) completed at 11181 then wave (v) from 11181-10670 doesn’t look like Impulse or Ending Diagonal Triangle. This condition will be a question mark for time being.

But no matter if this last down leg from 11181-11637 is Impulse or Corrective, we can calculate next moves based on the pattern of bounce after 10637 only. So, let’s ignore earlier move for time being and concentrate on the pattern of bounce after 10637.

After 10637, it seems wave (A or 1) completed from 10637-11141, wave (B or 2) completed from 11141-10670 and wave (C or 3) may be completed from 10670-11694.

Wave (C or 3) retraced by more than 38% after breaking below 11302 but closed way below 11302 at 11174. Break of 11302 is warning cautions for further decline towards 10637, and earlier support 11452-11302 can act as resistance now.

Now, let’s concentrate on decline after 11694 to check its pattern and to calculate further move.

This is 15 minute time bar chart of Nifty covering decline after 11694 which I marked as start of wave (4) on hourly chart. The decline after 11694 is forming a very complex type of pattern because of 02 Big Irregular Corrections repeatedly.

Now, it seems wave (1) completed from 11694-11573, wave (2) completed from 11573-11610 as big Irregular Correction and wave (3) may be in progress.

Within wave (3), it seems inner wave (i) completed from 11610-11492, wave (ii) may be completed from 11492-11593 as big Irregular Correction and wave (iii) may be in progress.

Within wave (iii), it seems inner wave [1], [2], [3], [4] is completed and [5] may be in progress. Wave [5] already achieved 61% projection after break below 11186 whereas next 100% projection is placed at 11054. 100% projection for wave [5] is a rare case, so 11054 can act as immediate support.

23%-38% retracement of progress of wave (iii) is placed at 11260-11324. So, 11260-11324 is immediate resistance and 11324 is immediate upside breakeven point. Nifty can give one more decline of minimum 173-280 points without breaking higher above 11324. But Nifty if breaks and stay above 11324 for more than 15 minutes can result in further bounce towards 11400-11593.

Conclusion

For Long Term, there is possibility of Ending Diagonal (ED) Triangle pattern for the move after 11004. If it is really going to be ED then next 1-2 years are going to be tough for Analysts and traders because many TA indicators fails to give desired results during ED. And this ED will be big because its inner waves (1) itself is of 2000 points. Nifty can rise with many volatile and unexpected up/down swing if it is going to be Ending Diagonal Triangle as I explained on Daily Chart.

Conditions on all the charts are already tough because pattern of every chart (daily, hourly, 15 minutes and 5 minutes) is complex in nature. We need to be selective in deciding trades.

For Medium/Short Term, Nifty broke below major downside breakeven point 11302. So there is possibility of major downside reversal and there are cautions for further decline towards 10637. 11302-11452 can act as strong short term resistance. But trades will be decided based on internal immediate levels.

For Intraday/Very Short Term, 11260-11324 is immediate resistance and 11324 is immediate upside breakeven point. Nifty can give one more decline of minimum 173-280 points without breaking higher above 11324.

But Nifty if breaks and stay above 11324 for more than 15 minutes can result in further bounce towards 11400-11593.

On downside, 11054 can act as immediate support and Nifty can consolidate above 11054 or can give a small or big bounce before breaking below 11054.

We need to keep all these conditions in mind while deciding next trade.

Trading Points of View:
Trading Strategy and exact trade are for our Subscribers only, those who wants to trade can plan their own trades according to levels and conditions explained in conclusion. These levels and conditions are subjected to change in case Nifty declines below 11158 or if open huge gap up/gap down, so  these levels and conditions can be used for trading only if  readers have knowledge of Sweeglu Elliott Wave Rules.

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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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