Nifty can Decline by 180-280 Points Without Breaking above 10751

| November 16, 2018

Nifty opened higher at 10644, bounced further to resister day’s high 10695 and traded in 10631-10695 range for rest of the day with up-down swing. Finally, Nifty closed 65 points up at 10682.

Friday, 10684 was minimum upside targets but there were cautions for a small or big decline very soon after achieving 10684. 10684-10743 was good resistance and Nifty was expected to decline by 200-400 points in coming days if it achieves 10684 but fails to break above 10743 before 1:30 PM (within 04 hours after opening) on Friday.

Trading strategy was to sell Nifty systematically in 10684-10743 range if it achieves 10684 but fails to break above 10743 before 1:30 PM and 10751 was exact stoploss for the trade. Small and safe traders were advised to trade in 10600/10500 Puts of Nov Expiry with same stoploss because stoploss was big.

Nifty achieved minimum target 10684 but failed to break above 10743 before 1:30 PM and was trading in 10684-10695 range at 1:30 PM, so trade was activated. Nifty also faced good resistance near 10684. 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 counts of Nifty on daily chart

Elliott Wave counts 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 [V] 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 ‘3’ of [v] is completed at 11171 and ‘4’ may be in progress as Irregular Correction with inner wave (A) of ‘4’ completed from 11171-9951 as Impulse, wave (B) may be completed from 9951-11760 as (abc) and wave (C) may be in progress.

Wave (C) of Irregular Correction normally completes at or after the end of wave (A) which is 9951. And 38% retracement of wave ‘3’ is placed at 9918. So, 9951-9918 is general expected range for completion of Irregular Correction in this case. Otherwise, wave (C) already achieved its minimum requirements and projections.

If Irregular Correction already completed at 10004 then Nifty must bounce straightway for new life time high in quick time.

So, let’s analyse the decline started from 11760 to check if wave (C) of Irregular Correction started from 11760 is already completed or not.

Elliott Wave counts of Nifty on 5 hourly chart

Elliott Wave counts of Nifty on 5 hourly chart

This is 5 hourly time bar chart of Nifty covering decline after 11760 which I am marked as start of wave (C) of Irregular Correction. Again, there is no major change in wave counts on this chart.

It seems wave (1) completed from 11760-11269, wave (2) completed from 11269-11523, wave (3) completed from 11523-10198, wave (4) completed from 10198-10710 as Irregular Correction and wave (5) may completed at 10004 or still in progress.

{Pattern of wave (3) [from 11523-10198)] is not completely clear but I am still marking it wave (3) because this decline from 11523-10198 is carrying steepest and fastest move with big gap downs (personality of wave 3) and wave (4) retraced exactly 38% if I mark this decline from 11523-10198 as wave (3). So, the pattern of wave (3) is not completely clear but Personality of move and Fibonacci Retracement is supporting it.}

Wave (5) started from 10710 achieved minimum 38% projection and Nifty bounced back. So, may be wave (5) of (C) already completed but we need to wait for further confirmation because wave (C) is very big.

10710 is start of inner wave (5) of (C) and same is Reflex Point. The first impulse from low 10004 needs to complete above 10710 for confirmation of big reversal and we need to concentrate on bounce started from 10004 till then.

So, let’s have a separate look at bounce started from 10004 to identify further move.

Elliott Wave counts of Nifty on 30 minutes chartElliott Wave counts of Nifty on 30 minutes chart

Elliott Wave counts of Nifty on 30 minutes chart

This is 30 minutes time bar chart of Nifty covering bounce after 10004 which I am analyzing independently.

It seems wave (1) completed from 10004-10285 (pattern is not confident), wave (2) may be completed from 10285-10105, wave (3) may be completed from 10105-10645, wave (4) may be completed from 10645-10440 and wave (5) may be in progress.

Wave (5) achieved minimum 38% projection after breaking above 10684 and next 61% projection is placed at 10836 which may or may not be achieved.

We can expect minimum 180-280 point correction after completion of wave (5) [23%-38% retracement of this whole impulse started from 10004]

Now, let’s analyse the progress of wave (5) started from 10440 separately to check its pattern and to calculate immediate levels.

Elliott Wave counts of Nifty on 5 minutes chart

Elliott Wave counts of Nifty on 5 minutes chart

This is 5 minutes time bar chart of Nifty covering bounce after 10440 which I marked as start of wave (5) on 30 minutes chart.

It seems inner wave (i), (ii), (iii), (iv) is completed and (v) may be in progress. Wave (v) achieved normal 61% projection after breaking above 10662 and next 100% projection is placed at 10743 which is a rare case (wave 5 rarely projects more than 100%).

Nifty needs to breaks sharply above 10743 to negate these wave counts, otherwise there is possibility of small or big correction without breaking higher above 10743.

Within wave (v), it seems inner wave [1], [2], [3], [4] is completed and [5] may be in progress from 10631. Minimum 38%-61% projection for wave [5] is placed at 10693-10731 but end of wave [3] is 10695, so 10695-10731 is minimum target range for completion of wave [5].

Conclusion

For Medium/Long Term: – There is no change in medium/long term outlook, Nifty declined from 11760 without completing Impulse and there are indications of Irregular Correction at top. If it is Irregular Correction at top and decline started from 11760 is inner wave (C) of Irregular Correction then Nifty can bounce very sharply towards 11760 after completion of wave (C).

Overall pattern wise, 9951-9918 is normal expected range from completion of wave (C). Internal pattern of wave (C) had already achieved minimum projection, so if wave (C) already completed at 10004 then Nifty needs to bounce straightway above 11760 in quick time.

Wave (C) is very big, so we need to proceed step by step. The first impulse from low 10004 needs to complete above 10710 for confirmation of big reversal.

For short term/Intraday: – The impulsive wave started from 10004 already achieved minimum requirement and is very near to completion, so we can expect minimum 180-280 point decline very soon (23%-38% retracement of this whole impulse) and we can witness this decline without breaking higher above 10743.

Nifty needs to breaks above 10743 sharply to show further strength and we need to check the pattern again if it breaks higher above 10743, otherwise overall pattern is indicating good correction soon. 10695-10743 is strong resistance.

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

Trading Points of View:

An upside impulse is very near to completion, so any fresh buying must be avoided for time being and short term trading strategy must be Selling on Rise with stoploss whenever gets opportunity. 10695 -10743 is strong resistance.

Those who Sold Nifty or Bought Nov Puts in 10684-10743 range on Friday can hold the same using exact stoploss of 10751 expecting minimum 180-280 points decline from high. Stoploss is big so manage the quantity accordingly and same I mentioned in last report also. Generally, I don’t suggest trade with big stoploss but conditions are not supporting small stoploss and we can miss the opportunity if we wait for entry near stoploss.

Fresh selling can also be done in same range with same stoploss and targets.

Reminding again, Selling must be systematic. Small and safe traders can buy 10600/10500 puts with same stoploss. Trade in light quantity without being greedy because stoploss is big.

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.

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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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