Nifty can Decline Further Towards 9372-9357 in Coming Sessions

| May 19, 2017

Nifty opened huge gap down at 9453 and bounced just after opening to register day’s high 9489 but failed to sustain at higher levels and declined back by more than 100 points to register day’s low 9418 before closing 96 points down at 9429.

Yesterday, I mentioned the possibility of small or big correction very soon and suggested to hold Nifty May 9450 put taken in 40-45 range on Tuesday. Nifty declined by more than 100 points as expected and Nifty 9450 put bounced till 62. Let’s have a fresh look at latest charts for further scenario.

Today I am covering bounce from 19 Apr 2017 low 9075 and previous counts are explained in my earlier report Nifty can Bounce Sharply above 9377 for New High Again.

Elliott wave counts of Nifty for 19 May 2017

Elliott wave counts of Nifty for 19 May 2017

This is 30 minutes time bar chart of Nifty covering bounce after 9075 which I am expecting as start of new wave.

It seems an impulse is completed from 9075-9532 as shown on chart. Wave (5) of this impulse is highly extended with projected higher than 61%. Inner wave (v) of (5) started from 9372 is also highly extended.

23%-38% retracement of this whole impulse is placed at 9424-9357 which is the expected target range if I am right at identifying the pattern where 9424 is already achieved. On the other hand, start of extended wave (v) of (5) is at 9372 so Nifty has possibility to decline sharply towards 9372.

So, let’s have a separate look at pattern of decline started from all time high 9532.

Elliott wave counts of Nifty for 19 May 2017

Elliott wave counts of Nifty for 19 May 2017

This is 5 minute time bar chart of Nifty covering decline from all time high 9532.

The decline started from 9532 seems impulsive with inner waves (1), (2), (3) and (4) are already completed and (5) may be in progress. Wave (5) already achieved 61% projection after breaking below 9424 and is in extended zone whereas next 100% projection is placed at 9391. Extended wave (5) is started from 9478, so Nifty has possibility to bounce towards 9378 also.

This impulsive decline started from 9532 can be wave (A or 1), where wave (B or 2) can form upwards and may complete somewhere around 9478 followed by sharp wave (C or 3) downwards.

Conclusion:

Nifty declined sharply from higher levels as I was expecting from last 2-3 days. Now, 9372-9357 is next possible target range if I am right at identifying the pattern but there is also a possibility of bounce towards 9478 before next decline.

So, we must keep all these conditions in mind while preparing next trading plan.

Trading Point of View:

  1. 9450 Put bought on Tuesday in 40-45 range can still be hold till further updates as Nifty have possibility to decline towards 9372-9357 sharply. Profit can be booked if Nifty decline straightway towards 9372-9357 range. But position of Put must be light so that you will be comfortable even if put become zero because there are only 5 sessions to expiry and this put have every possibility of become zero.
  1. Wait for an upwards corrective pattern to form (if bounce towards 9478) to initiate fresh shorts on downside with exact stoploss. Shorts will be taken only if upside corrective forms otherwise trade will be decided based on the conditions and pattern formed.

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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"