Nifty can Bounce from 7511-7480 for Levels above 8000 in Medium Term

| August 7, 2014

In my last report, I expected Nifty to fall from 7686-7703 levels for lower levels of 7625-7578 with stoploss of 7725 as per previous identified pattern. Nifty declined till 7640 from expected levels but again bounced and broke above 7725. After touching 7525, Nifty disturbed previous clean impulsive pattern and now took the shape of  “Ending Diagonal Triangle”  and now Nifty is in last leg of down move of this Ending Diagonal before a strong uptrend that may take Nifty well above 8000 in medium term.

Let me show you the next expected move of Nifty on chart

07 Aug Nifty

This 15 minutes bar chart of Nifty shows,

The down move from new high 7837 (which is “C” of bigger corrective 4 as of me, if I take bigger picture) is taking shape of Ending Diagonal Triangle in 3-3-3-3-3 move (abc-abc-abc-abc-abc). This formation is very rare in wave “C” and is difficult to trade but is very bullish for next opposite trend (Up move).

If we see closely, except wave 2 (7725-7798, which was irregular correction) every other wave (1,3 and 4) have internal wave “c” shorter of “a” (78%-99%) which is to be observed closely.

Also in this down move,

  • Wave 2 corrected wave 1 by 61-70%
  • Wave 3 is just below 200% of 1 (not convincingly extended)
  • Wave 4 corrected wave 3 by 78%

From seeing above personalities of wave 1, 2 3 and 4, we can expect 5th wave downwards 61%-100% of total move from 7837-7596 (which is almost 240) points from end of wave 4 (7752).

Thus, we can expect wave 5th, started from 7752 which is expected to be 3 waves move “abc” can show levels 61% at 7603 and 100% at 7511. Though levels of 7603 will be result in 5th failure, so we can expect 5th as extended that may show lower levels 7511 (100%). Though, lower levels also possible till 123% (7454), 138% (7418) and 161% (7362).

But, we need to be cautious with Shorts/Selling after 7596-7511 range. Most of the analysts may be expecting a touch of lower trend line or lower levels till 7200-7000 (which is possible), but I am really CAUTIOUS FOR SHORTS/SELLING after seeing 7511-7480.

7511-7480 is advanced/expected levels of trend reversal; most accurate levels can be predicted after completion of wave “a” and “b”. So, keep in touch with (short term) regular updates.  

OTHER POSSIBILITIES:

Wave 5 can also extend up to 200% of total move from 0-3 that is around 7270. We can’t rule out the possibilities of 7270. But we need to be cautious after 7511-7480. Watching lower degree wave in shorter term charts may help to find it.

Thing to remember:

“Ending Diagonal Triangle” is always difficult to trade as it changes its internal patterns frequently. Having patience, trading less and trading with strict and trailing stoploss are the key to success. Nifty is very near to the “END of this corrective down trend” and to the “START of next bigger up trend” and can play confusing game at reversal point.

So, my advice is to have patience, trade in limits with discipline and save your trading capital to be able to catch next bigger Up Trend. Just avoid empting your pockets before the good opportunity.

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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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