Nifty can Bounce by 250-390 Points from 10692-10682 Range

| January 2, 2019

Nifty opened lower at 10868 and traded in 10838-10895 range for couple of hours but declined sharply later by more than 160 points to register day’s low 10735 and closed 117 points down at 10792.

Yesterday, we just had 10878 as immediate breakeven point on downside and Nifty was expected to decline towards 10807 again if breaks below 10878.

I didn’t suggest any exact trade and advised traders to decide their own trade based on the conditions explained.  Nifty broke breakeven point 10878 as opening and then decline till 10735. 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.

Elliott Wave Analysis of Nifty on daily chart

Elliott Wave Analysis of Nifty on daily chart

This is daily time bar chart of Nifty covering bounce after low 6825 which I marked as start of wave [V] on daily chart in my last “All Time Frames” Report.  This is the same chart with explanation which I had explained in my last analysis report because there is no 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 ‘3’ of [v] is completed at 11171 and ‘4’ may be completed at  Irregular Correction at 10004 and wave ‘5’ may be in progress.

Point of Cautions: – The reversal after completion of Irregular Correction is known to be sharp but the bounce after 10004 is slower when compared to the speed of wave (c) of Irregular Correction. So, we need to be cautious for one more low below 10004.

Now, let’s analyse the bounce started from 10004 separately to calculate internal moves.

Elliott Wave Analysis of Nifty on 5 hourly chart

Elliott Wave Analysis of Nifty on 5 hourly chart

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

Same as I explained yesterday, it seems an impulse completed from 10004-10941 and same can be marked wave (A or 1) but further decline from 10941-10333, bounce from 10333-10985 and decline from 10985-10534 also looks like Impulse which I marked as wave (a or 1), [A or 1] and [a or 1]. Now, very last bounce started from 10534 is also an Impulse and I marked it as A or 1.

And all the upside Impulsive waves retraced about 61%.

But the overall combination of these repeated Impulsive waves is not forming any convincing EW pattern, it can be progress of Double Zigzag Correction or Irregular Correction or any other pattern which I am not able to identify yet. We need to wait for clarity in pattern.

There is lack of confidence in wave counts on this 5 hourly chart because of various factors. So, need to concentrate on bounce started from 10534 until we get clarity.

Elliott Wave Analysis of Nifty on 15 minutes chart

Elliott Wave Analysis of Nifty on 15 minutes chart

This is 15 minutes time bar chart of Nifty covering bounce after 10534 which I am analysing independently.

It seems an impulse completed from 10534-10923 as marked on chart but we can’t conclude which impulse this is on higher time frame, so I used alternate wave counts and marked it as A or 1. 61% retracement of wave A or 1 is placed at 10682.

Wave B or 2 looks like a 3-3-5 Flat Correction with inner wave (a) completed from 10923-10813, Flat (b) completed from 10813-10923 and wave (c) may be in progress. Start of wave (a) and end of wave (b) is exactly same (requirement for Flat Correction and wave (c) needs to be impulse. We can see a sharp bounce for 10923 and above after completion of this Flat Correction.

(Learners, please read topic “3-3-4 Flat Correction” in “Elliott Wave Patterns” to understand 3-3-5 Flat Correction)

Within wave (c), it seems inner wave (1), (2), (3) completed till 10735, (4) may be completed at 10809 and (5) may be in progress. Minimum 38%-61% projection for wave (5) is placed at 10737-10682 but end of wave (3) is 10735, so 10735-10682 is minimum target range for completion wave (5) of (c). Next 100% projection for wave (5) is placed at 10621 which is a rare case.

Overall, 10692-10682 is expected range for completion of Flat Correction (wave B or 2) and we can expect a sharp bounce for high above 10923 with first target 10809 [start if wave (5) of (c)] after completion of this flat Correction. 10692-10682 is also a strong support and Nifty may not break much lower below 10621.

Conclusion

For Medium/Long Term: – There was a possibility of Irregular Correction on Daily chart and same was indicating a sharp bounce for new life time high. But the bounce after 10004 is slower when compared to last fall and same is warning cautions for one more low below 10004. So, we need to concentrate on short term outlook until we get clarity in medium term outlook.

For short term: – There is possibility of 3-3-5 Flat correction at top and there is often a strong reversal after completion of 3-3-5 Flat Correction. 3-3-5 Flat correction can complete somewhere around 10692-10682 range followed by strong reversal and we can expect this reversal without breaking below 10621.

10809 is immediate upside target and 10923 is minimum target otherwise Nifty can bounce by 390-450 points from latest low.

We need to look for fresh pattern again if Nifty breaks and stay below 10621. We need to keep all these conditions in mind while deciding next trade.

Trading Points of View:

According to conditions on charts: –

10692-10682 is strong support and there is possibility of sharp bounce towards 10809-10923 which can extend even further and 10621 is approximate maximum downward limit. So, buying can be planned in 10692-10682 range using stoploss some points below 10621 expecting sharp bounce towards 10809-10923. We can expect even 390 points bounce from low.

I prefer buying 10800-10900 Call of Jan 2019 expiry if get Nifty in 10692-10682 range using stoploss or 10599 (20 points below 10621) expecting bounce above 10923 in coming sessions. I prefer buying options because stoploss is big.

Otherwise traders can plan their own trade based on their trading style, capital limit or risk tolerance. But don’t be greedy, trade in comfortable quantity and follow strict stoploss. Don’t lose big in a single trade.

INTRADAY TRADING OPPORTUNITY DURING MARKET HOURS ON 02 JAN 2018 

We are right at analysis most of the times but fail to catch the trade or we often miss perfect trading opportunity and some of my clients are asking about the reasons, so I added a special section to explain the same.

Clients need to understand that I prepare analysis report a day in advance. I analyse and make conclusions based on the move happened till date and suggest a trade based on that conclusion.

Sometimes Nifty closes at a point where I can calculate most accurate entry levels and stoploss but sometimes Nifty closes at  middle of the pattern where it is not possible to calculate exact entry levels and small stoploss, we need to wait for completion of pattern to calculate exact entry levels in such cases. Or sometime, the support/resistance range is so big that I can’t calculate narrow trade entry range without seeing the pattern.

So, I suggest trade nearer to breakeven/reversal point when I don’t have exact narrow entry range or I suggest traders to decide their own trade.

We miss the trade not because the analysis is wrong, we miss the trade because it is not always possible to calculate exact entry levels in advance, and there are scenarios when exact trades can be decided during market hours only after confirmation from internal patterns.

Sometimes Nifty reverse without touching entry range, sometimes targets achieves at opening only because of Gap opening or sometimes stoploss triggers.

There is no remedy for this problem. Either I need to provide live market updates during market hours (which is not possible for me at this time) or you need to learn yourself so that you can identify perfect opportunities yourself during market hours. That is the reason I always insist my clients to work and learn themselves instead of depending completely on me.

Yesterday, I explained the condition that “Nifty if breaks below 10878 can result in further decline for low below 10807”. Nifty broke this breakeven point 10878 at opening and then traded in 10838-10985 range for some time followed by a sharp decline of 160 points. Now, let’s see if there was opportunity to trade. Look at 5 minutes chart below.

Elliott Wave Analysis of Nifty on 5 minutes chart

Elliott Wave Analysis of Nifty on 5 minutes chart

This is 5 minutes time bar chart of Nifty covering decline after 10923. 10878 was breakeven point based on yesterday’s analysis and this breakeven point was broken today’s morning.

10807 was minimum target after break below 10878 but Nifty bounced from 10838-10985. The pattern of bounce (from 10838-10985) was corrective and retraced exactly 61% as marked on chart. So, this overall move could be marked as wave (a or 1) completed from 10923-10985 and wave (b or 2) completed from 10838-10985. Now, 100%-123% projection for wave (c or 3) was immediate downward targets and same was at 10814-10792.

And later, if someone wanted to confirm from trend lines then lower trend was broken and Nifty was facing resistance. I personally don’t use trend lines but it was convincing for those who use it.

So, overall conditions were indicating a very good opportunity for selling near 10878-10895 range using stoploss some points above 10895 expecting 10807-10792 as minimum downside target which could extend further lower.

There was one more trading opportunity when Wave (c or 3) reacted by about 38% (bounced from 10735-10809), but this opportunity came near closing and I personally avoid taking trade near closing.

We can see that there was a perfect opportunity for selling during marked hours and our yesterday analysis was also suggesting the same. And there is nothing new on this chart, I had done the same analysis with same rules which I follow in my daily analysis report. The only difference is that I applied the same rules live during market hours.

But I could not suggest the same trade yesterday Nifty because it was impossible for me to know if Nifty is going to break 10878 or if it is going to make this corrective pattern from 10838-10985, this opportunity could be caught during market hours only. And those who understand EWT can only identify such opportunities during market hours.

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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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