Nifty Can Decline below 10637 Without Breaking Much Higher Above 11197

| August 27, 2019

Nifty opened huge gap up at 11000 and declined sharply after opening by more than 240 points to register day’s low 10756 but bounced back again by more than 3000 points to register days high 11070 and finally closed 228 points up at 11057.

Yesterday, Nifty was in negative zone and has possibility to decline towards 10585-10440 in coming sessions. 10923-10932 was immediate resistance and 10810 was immediate downside breakeven point.

Trading strategy was to sell Nifty near 10923 or after break below 10810 but huge gap up at 11000 changed the whole pattern and scenario. Further Live updates with fresh outlook and fresh levels were sent to “Live Updates Subscribers”. 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 [5] on daily chart in my last “All Time Frames” Report. There is no major 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 [iii] of [5] is completed at 11171 and [iv] may be completed at Irregular Correction at 10004 and wave [v] may be in progress. Wave [v] achieved minimum projections after breaking above 11761 whereas next 61% projection is placed at 12689 which may or may not be achieved. Wave [v] achieved 12103 but pattern doesn’t seem completed.

So, let’s analyse the progress of wave 5 started from 10004 separately to calculate internal moves.

Elliott wave analysis of Nifty on daily chart

This is again daily time bar chart of Nifty covering bounce after 10004 which I marked as start of inner wave [v] of [5] on daily chart.  

The bounce from 10004-12103 is confirmed as (abc) move because of overlapping of waves after break below 10985. Now we have 02 possibilities on this chart.

  1. The (abc) bounce from 10004-12103 is inner wave [1] of Ending Diagonal Triangle for wave [v]. If this is the case then Nifty can decline towards 10585 to complete wave [2] of ED and later Nifty can bounce slowly with volatility for new high to complete wave [3], [4] and [5] of ED. Possibility of ED will get negated if Nifty breaks below 10004 (end of wave [1]).
  • The (abc) wave completed from 10004-12013 is wave (B) of Irregular Correction. If this is the case then Nifty can decline towards 10004 to complete wave (C) of Irregular Correction followed by new quick Bullish Rally for new high.

Now, we need to focus on pattern of decline after 12103 to calculate further probabilities.

After 12103, it seems wave (a or 1) completed from 12103-11625, wave (b or 2) completed from 11625-11981 as Double Zigzag Correction and wave (c or 3) may be in progress. Pattern of wave (a or 1) is not clear.

Within wave (c or 3), it seems inner wave (i) completed at 11461, (ii) completed at 11706 as Double Zigzag Correction, (iii) completed at 10782 , (iv) or (v) may be in progress.

Wave (v) achieved its minimum 38% projection after but pattern doesn’t seem completed and internal waves overlapped. So there is possibility for wave (iv) to turn into Irregular Correction.

38% retracement of this whole decline after 12103 is placed at 10982-11197. So, 10982-11197 is major resistance and 11197 is major upside breakeven point. Any major reversal can be expected after close above 11197 only.

Let me explain the possibility of Irregular Correction on separate lowest possible time frame.

Elliott wave analysis of Nifty on hourly chart

This is 30 minute time bar chart of Nifty covering move after 10782 which I marked as start of wave (iv) on daily chart.

The bounce from 10782-11181 is Simple Zigzag (abc) move but the decline from 11181-10637 also look like 3 waves move and then waves overlapped.

So, may be wave (iv) is still in progress with inner wave (A) completed from 10782-11181, Irregular (B) may be completed from 11181-10637 and wave (C) may be in progress. Wave (C) must be an Impulse and can complete somewhere around 11181 followed by decline below 10637 again.

Or there are 02 more other possibilities: –

  1. May be wave (iv) completed from 10782-11181 and the (abc) decline from 11181-10637 may be inner wave [i] of ED. Nifty needs to decline below 10637 again without breaking above 11181 in this case.
  2. May be wave (v) completed from 11181-10637 as it achieved minimum 38% projection and I am wrong at identifying inner waves. 10982-11197 will be major resistance in this case (explained on daily chart).

There are multiple possibilities on this chart whereas Irregular Correction is most probable. And if we combine all the probabilities then 11181-11197 looks like a major resistance/trend reversal/pattern negation point.

Now, let’s have a separate look at bounce after 10637 to check its pattern on lowest possible time frame.

Elliott wave analysis of Nifty on 5 minutes chart

This is 5 minutes time bar chart of Nifty covering bounce after 10637 which I am analysing independently with alternate wave counts because upside breakeven point 10831 is broken.

It seems wave (a or 1) completed from 10637-11000, (b or 2) may completed from 11000-10756 (retraced around 61% but pattern is not clear), and (c or 3) may be in progress.

Within wave (c or 3), it seems inner wave (iii) may be completed at 11070 or still in progress. 23%-38% retracement of progress of wave (c or 3) is placed at 10995-10950. So, 10995-10950 is immediate support and 10950 is immediate downside breakeven point.

Nifty if breaks and stay below 10950 can result in further decline towards 10756-10637 otherwise further bounce for higher levels is possible.

Conclusion

Overall, Nifty is still in medium term negative zone with possibility of further decline towards 10585-10004 and already in major resistance 10982-11197. 11181-11197 is major upside breakeven point and we can think of any upside reversal after break above 11197 point only.

For Intraday/short term, 10995-10950 is immediate support and 10950 is immediate downside breakeven point. Nifty if breaks and stay below 10950 can result in further decline towards 10756-10637 otherwise further bounce for higher levels is possible.

We need to keep all these conditions in mind while deciding next trade.

Trading Points of View:

CLICK HERE for more details

Short term trading strategy is “Selling on Rise” expecting further decline towards 10585-10440 whenever gets opportunity with small stoploss. Nifty is already in major resistance 10982-11197 whereas one possibility is also indicating bounce towards 11181.

Nifty can either decline from present levels or from somewhere around 11181 and fall is expected to be fast. So, any suitable Put of 10600 below strike of Sep monthly expiry can be bought in 11085-11181 in light quantity range without stoploss expecting decline towards 10585-11440 in coming days/weeks. We can exit the trade if Nifty stay /close higher above 11197.

Please note, trade is to be done without stoploss because waves are bigger and we can’t place any exact small stoploss. All the money used for buying Puts can be lost if we go wrong in analysis, so adjust your quantity accordingly. Don’t be greedy and over excited and trade in light quantity which can afford to lose.

Any short term trade with small stoploss can be planned if get in 10995-10950 range only and same will be updated to “Live Updates Subscribers” through WhatsApp Broadcast during live market hours.

Further, I will update about formation of any important internal pattern or any change in trend/pattern/important levels or fresh support/resistance/breakeven point during market hours by WhatsApp Broadcast to all my “Nifty Live Updates” subscribers.

Tags: , ,

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"

Comments are closed.