Nifty can Bounce above 8032 without breaking below 7730 – EW Analysis on 15 May 2016

| May 15, 2016

Nifty opened mild gap down on Friday followed by a sharp decline below 7800. Nifty declined more than 110 points from previous close followed by range bound consolidation before closing 85 down at 7814.

In Friday’s report, I expect a decline of 100-140 from 7916-7940 but Nifty declined without touching that range. 7860 was pattern’s negation points which broke in the morning only followed by fall of another 75 points. But Nifty entered our positional buying range after declining below 7800. Let’s ha a fresh look at latest charts now.

Today I am showing Nifty move from 29 Feb 2016 low 6825. Earlier counts you can read in my previous analysis report Elliott Wave Analysis Report of Nifty for 02 May 2016.

Nifty Elliott Wave Analysis for May 2016 Expiry

Nifty Elliott Wave Analysis for May 2016 Expiry

This is hourly time bar chart of Nifty covering move from 29 Feb 2016 low 6825.

As I explained in my previous report, conditions are favoring the possibility of formation of Ending Diagonal (ED) on this chart after 7405 which I also mentioned in my previous analysis report. It may be wave (4) completed at 7405 followed by wave (5) is in progress as Ending Diagonal where: –

  1. Inner wave (i) completed from 7405-7777 as (abc)
  2. Wave (ii) completed from 7777-7517 as Simple Zigzag (abc)
  3. Wave (iii) may be completed from 7516-7978 as (abc)
  4. Wave (iv) may be completed from 7978-7678 as Irregular Correction
  5. Last wave (v) may be in progress which must be completed as (abc) pattern and need to project minimum 61%. So, 61% projection of wave (v) of ED is placed at 8032 which must be the minimum target if we are right at identifying the pattern. And within wave (v) of ED which must be (abc), wave (a) may be completed, (b) is in progress and wave (c) upwards is pending for 8032. But wave (b) of (v) should not break below the lower line otherwise pattern will be negated.

Now, Nifty should not break below the lower line of Ending Diagonal (ED) to keep this pattern intact as shown on chart. Breaking below lower line before breaking above 7992 will negate the ED pattern. So, positional stoploss for longs must be that lower line of ED which is around 7730-7740 right now. And any decline near that lower line can be bought with stoploss below the line expecting minimum target 8032.

Now let’s have a look at progress of inner wave (v) of Ending Diagonal Triangle started from 7678 on 5 minutes chart.

Nifty Elliott Wave Analysis for May 2016 Expiry

Nifty Elliott Wave Analysis for May 2016 Expiry

This is 5 minutes time bar chart of Nifty covering move from 06 May 2016 low 7678 which I am expecting as start of inner wave (v) of (5) progressing as Ending Diagonal Triangle Pattern which must be in (abc) pattern.

It seems inner wave (A) is completed from 7678-7916 as impulse and wave (B) is in progress of already completed at 7784 and (C) upwards is pending. And if we look at progress of wave (B) then,

Inner wave (a) of B may be completed from 7916-7849, wave (b) may be completed from 7849-7906 and last wave (c) may be already completed or in progress.

And within wave (c), it seems inner waves (i), (ii), (iii) and (iv) are already completed and last wave (v) is either completed or in progress. 61% projection for wave (v) is placed at 7790 which is already achieved and wave (v) is already in extended zone. Next 100% projection is placed at 7758.

So, wave (c) may be already started from 7784 or may start from 7783-7758 range very soon. And wave (c) upwards we can expect sharp and faster as inner wave (v) of (c) is extended and wave (a) was also sharp.

Conclusion:

The short term outlook is same as I explained Friday, lower line of ED on first Hourly chart which is around 7730-7750 at present should be the stoploss for positional longs and any decline near this line can be bought with stoploss below the line expecting minimum target 8032.

Nifty already declines near that lower line of ED giving low risk / high reward trading opportunity if we are right at identifying the pattern. So, short term strategy must be buying in dips with stoploss of 7730 expecting minimum target 8032. Even touch of 7730 will negate the pattern and nifty can further decline below 7678 before further bounce.

Or Nifty 7900 May cal can be bought on dips (which is around 57 at present) with stoploss 7730 spot expecting minimum target 132. Don’t be greedy and trade in limited quantity so that you can accept the loss even if 7900 cal becomes zero.

Any trader can be decided based on above mentioned conditions using strict stoploss.

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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"