Nifty can Decline by 83-133 Points Before Breaking Higher above 11335

| July 28, 2018

Nifty opened higher at 11232 registered low 11210 but bounced back and traded with strength for rest of the day. Nifty bounced further by more than 110 points to register new life time high 11283 and closed 111 points up at 11278.

Yesterday, Nifty was in positive zone with 11089 as breakeven point and further bounce towards 11250-11335 was expected without breaking lower below 11089.

Trading strategy was to buy Nifty if get near 11089 forming corrective pattern using stoploss of 11075 expecting new life time high as minimum target. But Nifty opened gap up and achieved 11250 without giving chance to buy. Now, let’s 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 count of Nifty on daily chart

Elliott Wave count 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 inner wave (1) completed from 9951-10229, wave (2) completed from 10229-10111 as Irregular Correction, wave (3) may be completed at 10929, wave (4) may be completed at 10417 as Simple Zigzag and wave (5) may be in progress. [Wave (4) retraced deeper than 38%).

Wave (5) already achieved 61% projection after breaking above 11022 and next 100% projection is placed at 11395 which may or may not be achieved, so we need to concentrate on its pattern now onward.

So, let’s analyze the progress of expected wave (5) started from 10417 on lowest possible time frame chart to check its pattern closely.

Elliott Wave count of Nifty on 5 hourly chart

Elliott Wave count of Nifty on 5 hourly chart

This is 5 hourly time bar chart of Nifty covering bounce from 10417 which I have marked as start of wave (5) on daily chart.

The first wave from 10417-10893 looks like a 3 waves [abc] move. So,  the first [abc] move from 10417-10893 is indicating the possibility of Ending Diagonal Triangle with inner wave [i] of ED completed from 10417-10893, [ii] completed at 10557 as Double Zigzag correction and wave [iii] may be in progress.

Wave [iii] already achieved normal 100%-123% projection whereas 161% projection is placed at 10327 which is the maximum limit for wave [iii] and pattern negation point for Ending Diagonal Triangle.

Within wave [iii], it seems inner wave [a], [b] is completed and [c] may be in progress from 10605. And within wave [c], it seems inner wave (i), (ii), (iii), (iv) is completed and (v) may be in progress from 10925. Wave (v) of [c] achieved normal 61% projection next 100% projection is placed at 10398 which may or may not be achieved.

Confusion: – But wave [iii] is steep and sharp which is not normal within ED. So, I am leaving this pattern for time being and will wait for confirmation (ED will be confirmed if Nifty declined below 10893 without breaking above 11327). And I will concentrate on last Impulsive wave (v) of [c] started from 10925 only to calculate immediate moves.

Elliott wave analysis of Nifty for 30 Jul 2018

Elliott wave analysis of Nifty for 30 Jul 2018

This is 15 minute time bar chart of Nifty covering bounce from 10925 which I am analyzing independently because there are conflicts in pattern of previous waves.

Inner wave (1) may be completed from 10925-11076 (pattern is not clear), wave (2) may be completed from 11076-10935 and wave (3) may be in progress from 10935.

Within wave (3), it seems inner wave (i) completed from 10935-11054, (ii) may be completed from 11054-11023, wave (iii) may be completed from 11023-11157, wave (iv) may be completed from 11157-11113 and wave (v) may be in progress.

Wave (iii) of (3) is not extended, so wave (v) needs to be extended. So, minimum 61% projection for wave (v) is placed at 11250 which is already achieved and next 100% projection is placed at 11335 which may or may not be achieved.

Wave (v) projecting more than 100% is a rare case, so Nifty can give a small or big decline before breaking higher above 11335.

23%-38% retracement of progress of whole wave (3) is placed at 11200-11150. So, 11200-11150 is short term support range whereas 11150 is breakeven point and same can be used for stoploss for longs. Nifty if breaks and stay below 11150 for 15 minutes can result in further decline towards 11078-10925.

Conclusion

For long/medium term,

Same as I explained in my all time frames report, Outlook for medium/long term is still bullish because Nifty is within the middle of wave (3) on largest wave cycle and there is Irregular Correction at top. Nifty has long way to go with occasional corrections (maximum 23%-38% corrections with 9918 as breakeven point and 8968 as pattern negation point). Nifty may not break below 8968 in any case in coming years before competition of larger wave cycle.  We need to revise whole wave counts if Nifty ever broke below 8968.

For Short Term,

Nifty is still in positive zone with 11200-11150 as short term support and 11150 as breakeven point on downside. 11327-11335 is mild resistance on upside and there is possibility of a small or big decline before moving higher above 11335. The decline can be expected towards 11200-11150 (support range) or 83-133 points [23%-38% retracement of wave (3)] from fresh high.

And Nifty if decline towards support range 11200-11150 with corrective pattern then one more bounce towards new life time can be expected.

Any reversal can be expected after breaking below 11150 only. Nifty if breaks and trade below 11150 for 15 minutes then further decline towards 11078-10925 can be expected.

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

Trading Points of View:

According to fresh conditions on charts: –

Nifty if get in 11320-11335 range (near 11335) then light selling can be done using exact stoploss of 11343 expecting minimum 80-130 points decline. Trade in light quantity because wave (3) is in progress.

Wave (3) started from 10935 already achieved its all minimum requirements so decline can happen from present levels also. So, trade can also be done based on opening price: –

So, Note down Monday opening price and wait for 15 minutes. Nifty if trades below opening price at 9:31 AM (15 minutes after opening) then Nifty can be sold on bounce near opening price for Intraday using stoploss of 27 points expecting 80-130 points from fresh high. Manage the trade with trailing stoploss for Intraday and hold for next day only if Nifty closes near the low of the day.

These are most probable 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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