Nifty can Bounce by 300-400 Points from 10141-10083 Range

| March 19, 2018

Nifty opened lower at 10345, decline sharply just after opening and traded with huge negativity for rest of the day. Nifty declined by about 180 points to register day’s low 10180 and closed 165 points down at 10195.

Yesterday, I expected an Ending Diagonal Triangle in progress and a decline below 10141 was expected without breaking above 10631 to complete this pattern. 10420 was immediate breakeven point and stoploss for shorts.

Short term trading strategy was Selling on Rise with stoploss of 10421. And I also suggested holding hedge trade taken on Monday/Tuesday by buying 10600 Call and 10300 Put in equal quantity till further update. Hedge trade was giving 60-70 points profit on Friday. Let’s have a fresh look at latest charts for further scenario.

This analysis report is covering bounce from low 6825 and earlier wave counts are explained in my last “All time Frame” report Elliott Wave Analysis Update of Nifty on All Time Frames as on 22 Jan 2018

Elliott wave counts of Nifty on Daily Chart

Elliott wave counts of Nifty on Daily Chart

This is daily time bar chart of Nifty covering bounce from 6825 which I am expecting as start of wave {[v] of [3] of (iii)} of larger (3) on monthly chart. 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.

It seems inner wave 1 of [v] completed from 6825-8968, 2 completed at 7893 and wave 3 may be in progress.

And within wave 3 started from 7893, there is small but identifiable correction from 10137-9687, so 10137 can be inner wave (iii) of 3 followed by (abc) correction from 10137-9687. But the later bounce from 9687-11171 is also 3 waves move followed by sharp decline. So, there are 02 possibilities: –

  1. Either wave (iv) of 3 completed at 9687 and wave (v) in progress
  2. Or wave (iv) is still in progress as Irregular Correction with wave (A) completed from 10137-9687, Irregular (B) completed from 9687-11171 and wave (C) in progress from 11171.

This chart is showing two possibilities, so need concentrate on decline from 11171 to calculate further move until we get clarity on daily chart.

Elliott Wave analysis of nifty on hourly chart

Elliott Wave analysis of nifty on hourly chart

This is hourly time bar chart of Nifty covering decline from all time high 11171 which is the start of downward impulse. This is again the same chart with explanation which I had explained in my last analysis report because there is no major change in wave counts on this chart.

It seems wave (1) completed at 10979, (2) completed at 11117, (3) completed at 10276, (4) completed at 10637 and wave (5) may be in progress.

Minimum 38%-61% projection for wave (5) is placed at 10295-10083 whereas Nifty achieved 10141 till now. Wave (5) already achieved its minimum Fibonacci projection and pattern looks like an Ending Diagonal Triangle, now we need to analyze the pattern of wave (5) on separate chart.

Ending Diagonal Triangle pattern in Nifty

Ending Diagonal Triangle pattern in Nifty

This is again hourly time bar chart of Nifty covering bounce from 10276 which I had marked as start of wave (5). Again, there is no change in expected wave counts yet.

This decline after 10637 has overlapping with repeated (abc) pattern, so there is possibility of Ending Diagonal Pattern for wave (5).

The first (abc) decline from 10637-10302 can be inner wave (i) of Ending Diagonal, next (abc) bounce from 10302-10631 can be wave (ii) of ED, wave (iii) may be completed from 10631-10141, wave (iv) may be completed from 10141-10478 as Double Zigzag Correction and wave (v) may be in progress.

Within wave (v), wave (a), (b) is completed and (c) may be in progress. Minimum 61% projection for wave (v) is placed at 10171 and end of wave (iii) is 10141. So, wave (v) of ED needs to complete below 10141.

Let’s analyze the progress of inner wave (v) of ED on separate chart.

Elliott wave counts of Nifty on 5 minute Chart

Elliott wave counts of Nifty on 5 minute Chart

This is 5 minute time bar chart of Nifty covering decline from 10478 which I had marked as start of inner wave (v) of ED.

It seems inner wave (a) of (v) completed from 10478-10336, (ii) completed from 10336-10420 and wave (c) may be in progress from 10420.

23%-38% retracement of wave (c) is placed at 10236-10271. So, 10236-10271 is immediate resistance on upside and 10271 is immediate breakeven point. Wave (c) has possibility to complete below 10141 and 10236-10271 is the resistance on upside.

Conclusion

It seems the Ending Diagonal Triangle pattern is in progress from 10637 which is in its last leg and can complete below 10141 somewhere in 10141-10083 range. And we can see a bounce of minimum 300-400 points after completion of this ED.

For very short term, 10236-10271 is immediate resistance on upside and 10271 is immediate breakeven point. Wave (c) has possibility to complete below 10141 and 10236-10271 is the range from where Nifty can decline.

Nifty if breaks above 10271 and moves higher than we need to look at the fresh pattern again. We need to keep all these conditions in mind while planning next trade.

Trading Points of View:

According to the conditions on charts:-

  1. Profit from hedges trade taken by buying 10600 Call and 10300 Put in equal Quantity near 10440 can be booked because it is not safe to hold options longs for long time as expiry is near.
  1. Nifty if decline below 10141 then 10400 call of April Expiry can be bought in 10141-10083 range without any stoploss and hold till next update. Trade in conformable quantity because we are trading without stoploss. Keep in mind that this call has every possibility to be zero.
  1. For short term or Intraday, Nifty if get in 10240-10270 range then 10300 Put of March Expiry can be bought using stoploss of 10283 expecting short term targets below 10141.

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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"