Nifty can Decline below 7940 in August Expiry – EW Analysis on 28 July 2015

| July 28, 2015

Nifty opened Gap down today and declined sharply almost 170 points from previous close without breaking above today’s opening price. As I was expecting a small or big decline in my yesterday’s analysis report and mentioned that Nifty need to fall sharply today otherwise we can see high above 8655 again (as there was some doubt if impulse completed or not). I also mentioned that nifty trading below opening price at 9:30 AM will be the sign of weakness.

In yesterday’s medium term Elliott wave analysis report of Nifty I explained there can be small or big decline in Nifty, either below 7940 or 38%-61% of the whole impulse from 7940-8651. Nifty shown the sign of correction today, so let us see if Nifty can go below 7940 or just 38%-61%.

Irregular Correction

Irregular Correction

This is daily time bar chart of Nifty covering move after 8996 which I am expecting as start of inner wave (4) of impulse started from 5118 in 2013 (Explained in yesterday’s report: Medium Term Outlook of Nifty as on 26 July 2015)  . By seeing the structure of inner waves and today’s fall, there are possibilities of Triple Zigzag formation which I also explained in many of my previous reports. If we see its inner waves then it seems:x

  1. First ABC cycle completed from 8996-8470.
  2. First link wave (X1) completed from 8470-9117 as Upside Irregular Corrective (abc) wave.
  3. Second ABC cycle completed from 9117-7997.
  4. Second link wave (X2) completed from 7997-8655 as Downside Irregular Correction which is suggesting the possibilities of a low below 7940 again.
  5. Third and last ABC cycle may be progress which needs to go below 7940 once again to complete a Triple Zigzag Correction.

And if this happen and Nifty broke below 7940, we can see a great bounce/bull rally for new high in very quick time which no one have expected.

Now, let’s have a look on move after June low 7940 on 30 minutes chart.

Elliott Wave Analysis for July Expiry on 30 minutes chart

Elliott Wave Analysis for July Expiry on 30 minutes chart

This is 30 minutes time bar chart of Nifty covering move after June 2015 low of 7940 which I am expecting as the start of impulse.

This move seems completed as impulse from 7940-8655 as show on above chart. It seems an impulse is completed at 8655 and correction has started. The decline after high 8655 looks impulsive after today’s sharp fall which can be the progress of wave (A) of correction which is somewhere within inner wave (3).

So, the impulse completed from 7940 may be inner wave (c) of (X2) as shown on first chart. And impulsive decline started from 8655 may be inner wave (A) of third and last ABC cycle of Triple Zigzag as shown on first chart again.

Let’s see decline from 8655 on separate 5 minutes chart.

Elliott Wave Analysis for July Expiry on 5 minutes chart

Elliott Wave Analysis for July Expiry on 5 minutes chart

This is 5 minutes chart of Nifty covering move after latest high 8655. It seems an impulsive decline from top which is somewhere within inner wave (3) of impulse. Wave (3) may complete at lower levels followed by corrective bounce of 23% -38% as wave 4 and then decline again to complete wave (5) of (A) at lower levels.

Though, we should not try to predict the end of wave (3) but approximately it can complete somewhere within 8328 -8254 followed by a bounce of 23% -38% and then decline again as indicated on chart.

Conclusion:

After seeing the structure of wave after Jan 2015 high 8996 and then nature of today’s impulsive fall, levels of 7940 seems possible soon may be in August Series only. As we are expecting it last ABC cycle of triple zigzag which is known to be faster followed by strong reversal. This decline should be of ABC structure as indicated on 1st chart.

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For short term, Inner wave (3) of expected wave (A) is near completion and we can see a small bounce of 23% -38% of wave (3) after its completion followed by a decline again for new low. Approximate levels for wave (3) may be 8328 -8254 and further levels can be calculated on after seeing actual completion of wave 3.

Short term trend is selling on rise but we can see a small corrective bounce within next 2 sessions.

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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"