Nifty can Bounce Towards 11906-12222 in Comings Weeks

| September 9, 2018

Nifty opened bit higher at 11558 and declined sharply to register day’s low 11484 but bounced back again by more than 110 points to register day’s high 11603 and closed 52 points up at 11589.

Friday, Nifty was expected to bounce further for new high above 11760 as breakeven point 11529 was broken and bounce was expected to be sharp and fast. 11469 was trailing stoploss for all longs.

Trading strategy was to hold both the trades (11600 call of Sep expiry bought in 11459-11393 range and same 11600 call bought after breaking above 11529) using exact stoploss of 11469. Nifty bounced further to register day’s high 11603 without breaking below 11469. Now, we need to have a fresh look at latest charts for further scenario.

This analysis report is covering move after 9951 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 9951 which I marked as start of wave ‘v’ on daily chart in my last “All Time Frames” Report. There is no change in wave counts on this chart.

It seems, wave (1) completed from 9951-10929, (2) may be completed from 10929-10417 and wave (3) may be in progress from 10417.

And within wave (3), it seems inner wave (i) of (3) completed from 10417-10893 (pattern not clear), (ii) completed at 10557 as Double Zigzag correction, wave (iii) may be completed at 11760 and wave (iv) or (v) may be progress.

23%-38% retracement of progress of wave (iii) is placed at 11476-11300 and Nifty already entered in this support range and bounced back.  11300 is medium term breakeven point and any bigger reversal can be expected after break below 11300 only. Nifty achieved 11393 and bounced back.

Minimum 38%-61% projection for wave (v) is placed at 11906-12222 if wave (iv) completed at 11393. So, 11906-12222 is minimum target range on upside if correction is already completed from 11760-11393 as Simple Zigzag.

Now, we need to analyze the pattern of decline started from 11760 to check if wave (iv) completed at 11393.

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 decline after 11760 which I am expecting as start of wave (iv) of (3) on daily chart.

There is slow decline from 11760-11630 followed by corrective bounce from 11639-11751 followed by sharp impulsive decline. So, this slow decline from 11760-11639 can be wave (A), corrective bounce from 11639-11751 can be wave (B) and wave (C) may be completed at 11393.

38% retracement of wave (C) is placed at 11529 and Nifty already breached this breakeven point. Breaking of this breakeven point is also supporting that correction is completed from 11760-11393 as Simple Zigzag and new upside wave has been started.

So overall, the pattern and Fibonacci retracements are indicating that wave (iv) completed at 11393 as Simple Zigzag and wave (v) has been started. Now, Nifty can decline below 11393 only if wave (iv) turns into Complex Correction otherwise most of the conditions are indicating bounce towards 11906-12222 [38%-61% projection for wave (v)].

Now, let’s have a separate look at bounce started from 11393 to check is pattern is indicating the possibility of wave (v).

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 bounce from 11393 which I am expecting as start of wave (v) of (3) on daily and 15 minutes chart.

It seems wave inner wave [1] and [2] or (v) is completed and wave [3] started from 11436. Within [3], it seems inner wave [i] and [ii] of [3] is completed and [iii] may be in progress but the pattern of wave [iii] is not clear.

Now, the pattern is indicating that inner wave [iii] of [3] in progress, so bounce must be sharp to support the possibility of wave [3]. Otherwise, any delay in bounce will create confusions. So, we can use 11523 (end of wave [1]) as stoploss for our longs because chances for decline below 11523 are rare if the pattern I marked is correct.

Conclusion

For Short Term,

Most of the conditions on charts are indicating a sharp bounce for new all time high above 11760 and bounce can extend towards 11906-12222. Otherwise, Nifty can decline below 11393 only if the correction started from 11760 turns into Double Zigzag or Triple Zigzag Correction.

The bounce must gain speed now onwards because we are expecting wave [iii] of [3] in progress and both waves [iii] and [3] is known to be sharp with gap openings. Any delay in further bounce can create confusions.

So, 11523 can be used as stoploss for existing longs because chances for decline towards 11523 are rare if the pattern I marked is correct and we need to protect the profit of our existing trades. Otherwise, final stoploss for longs is 11393 but our profitable trades will result in huge losses of we follow this stoploss.

We need to keep all these conditions in mind while planning/managing trades.

Trading Points of View:

According to fresh conditions on charts: –

“11600 Call of Sep Expiry bought in 11459-11393 range” and “11600 Call of same expiry bought above 11529” can be hold with exact stoploss 11523. 11523 is the stoploss for both the trades now.

Possibility for bounce towards 11760 will still be there even if stoploss of 11523 triggers as long as Nifty trading above 11300. But trade can be decided after looking at fresh pattern.

These are low risk trading strategies I can suggest in these conditions otherwise traders can plan their own trade based on the conditions explained above.

Note: – Possibility of bounce towards 11906-12222 is there because most of the rules and conditions are indicating that the “correction is completed from 11760-11393 as Simple Zigzag Correction in Support range 11476-11300” and “upside breakeven 11529 is broken”. But, Nifty can also decline below 11393 if the Simple Zigzag Correction completed from 11760-11393 turns into Double Zigzag or Triple Zigzag.

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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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