Nifty Can Decline Below 7541 in Coming Days – EW Analysis on 20 Sep 2015

| September 20, 2015

Nifty opened huge gap up at 7965 on Friday and bounced sharply till 8055 in morning sessions where it consolidated for a while but failed to sustain at higher levels and declined 90 points from high before closing 82 points up at 7981.

There was some confusion in pattern which I mentioned in my last analysis report but now we can see some clarity for next move on charts. So, today I am covering Nifty wave counts after July 2015 high 8665 as previous counts are same as I explained in my previous Elliott Wave Analysis Report of Nifty. Please read: Elliott Wave Analysis and Outlook of Nifty for All Time Frames as on 07 Sep 2015.

Nifty Elliott Wave counts for 21 Sep 2015

Nifty Elliott Wave counts for 21 Sep 2015

This is hourly time bar chart of Nifty covering move after July 2015 high 8655 which I am expecting as a start of downward impulse. Here it seems,

  • Wave (1) completed from 8655 -8321
  • Wave (2) completed from 8321 – 8621
  • Wave (3) completed from 8621 – 7541
  • Wave (4) started from 7541 and retraced more than 38% till now after breaking above 7953 whereas 50% and 61% is placed at 8081 and 8208 respectively. Why I am expecting it as wave (4) is explained on next charts.
  • Wave (5) needs to go below 7541 after completion of wave (4) at higher levels.

Now, we need to analyze the progress of wave (4) separately to identify if it is completed or still in progress. There are two possible conditions for wave (4) which I am going to explain separately on same chart.

Condition 1: 

Nifty Elliott Wave counts for 21 Sep 2015

Nifty Elliott Wave counts for 21 Sep 2015

This is 15 minutes time bar chart of Nifty covering move after 08 Sep 2015 low of 7541. This chart shows that wave (A) may be completed from 7541 – 7845, wave (B) completed from 7845 – 7681 and wave (C) may be completed from 7681 – 8055 on Friday which is exactly 123% of (A).

As I explained in many of my previous reports that wave (5) and (C) sometimes starts as consolidation with slower inner wave (3) and sharp/extended inner wave (5) followed by sharp decline. This wave (C) may be completed in same pattern.

I am expecting this pattern as (ABC) because wave (C) took more than double time to achieve 100% of (A) but still trading below 100% projection (100% projection at 7985), please see the move marked within grey boxes. There are rare chances for this pattern as waves 1, 2 and 3 as wave (3) is often steeper and faster than wave (1). And if it is (ABC) then it should be wave (4) on first hourly chart.

So, we can expect a decline below 7541 again without breaking above 8055 in this case.

Condition 2:

Nifty Elliott Wave counts for 21 Sep 2015

Nifty Elliott Wave counts for 21 Sep 2015

Again, this is same 15 minutes time bar chart of Nifty covering move after 08 Sep 2015 low of 7541. This chart shows that:

  • Wave (A) may be completed from 7541 – 7864
  • Wave (B) completed from 7864 – 7761 which is not even 38% of (A).
  • Wave (C) may be started from 7761 which is somewhere within inner wave (3) and not achieved 100% projection yet. 100% projection for wave (C) is placed at 8084 where as 138% and 161% projection is placed at 8207 and 8283 respectively. There are very rare chances for wave (C) to break 161% (8283).

Again, I am expecting this pattern as (ABC) because wave (C) took more time than wave (A) but still didn’t achieve 100% projection (100% projection at 8084), please see the move marked within grey boxes. There are rare chances for this pattern as waves 1, 2 and 3 as wave (3) is often steeper and faster than wave (1).  And if it is (ABC) then it should be wave (4) on first hourly chart.

So, Wave (C) may complete between 8084 – 8207 in this case followed by decline below 7541 without breaking much above 8283 (161% projection of C).

But, this pattern be will negated if Nifty breaks below 7879 (end of inner wave 1 of C) as wave (4) can never overlap wave (2) within impulse.

Conclusion:

By analyzing all the conditions on charts, Nifty is suggesting a minimum decline below 7541 in coming days/weeks, may be in Sep –Oct 2015 but we need a little confirmation of Top. So, there are two conditions for trading strategy:

  1. Strategic and Positional Nifty Shorts can be initiated in 8084 – 8207 range using 8287 as stoploss for short/medium term minimum target of 7541.
  1. If Nifty even touches 7879, then sell every rise with stoploss of 8057 for minimum target of 7541.

Small traders can wait to complete inner wave (i) of (5) downwards to sell during wave (ii) with low risk and small stoploss.

Strategy should be “Selling on Rise” until we see 7541 or any change in current wave’s pattern. Any change in wave’s pattern, trailing stoploss for sell and inner levels will be updated in daily Elliott Wave Analysis reports of Nifty.

Trade strategically with proper risk management and light quantity to prevent huge loss in case we prove wrong in identify pattern as trading range and stoploss is big.

Note for Students:

Please read the counts on all the charts carefully and try to understand why I am expecting bounce after 7541 as “Corrective (ABC), wave (4)” rather than impulsive. And try to understand both the conditions I have shown on charts. Refer “Personalities and Calculations of Waves” chapter of my book, especially personalities of wave (3) and (C) to understand these points.

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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"