Nifty can Decline Towards 10333-10004 Very Soon

| January 13, 2019

Nifty opened higher at 10834, registered high 10850 but failed to sustain at higher levels and declined by more than 110 points to register day’s low 10739 and closed 26 points down at 10794.

Friday, a minimum decline towards 10749-10720 was expected without breaking higher above 10870. Trading strategy was to sell Nifty if get in 10840-10870 range using exact stoploss of 10871 expecting 10749-10720 as minimum downside target range.

Nifty entered in 10840-10870 range, registered high 10850 and declined to achieve minimum target 10749. 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 analysis of Nifty on daily chart

Elliott wave analysis 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.

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 completed at  Irregular Correction at 10004 and wave ‘5’ may be in progress.

Point of Cautions: – The reversal after completion of Irregular Correction is known to be sharp but the bounce after 10004 is slower when compared to the speed of wave (c) of Irregular Correction. So, we need to be cautious for one more low below 10004.

Now, let’s analyse the bounce started from 10004 separately to calculate internal moves.

Elliott wave analysis of Nifty on 5 hourly chart

Elliott wave analysis of Nifty on 5 hourly chart

This is 5 hourly time bar chart of Nifty covering bounce after 10004 which I marked as start of inner wave ‘5’ of [v] on daily chart.

This chart is confusing me since a month but I observed it for whole day and tried to identify any confident pattern on this chart. Conflicts are still there between wave patterns and Fibonacci calculations but still I tried to mark most probable counts.

It seems a (ABC) wave completed from 10004-10985 with wave (A) completed from 10004-10645, wave (B) completed from 10645-10333 as Irregular Correction, and wave (C) may be completed from 10333-10985. Wave (C) achieved 100% projection.

If this upside (ABC) wave is first leg of Complex Correction or ED then Nifty can decline till 10333 OR if it is Simple Zigzag Correction then decline for low below 10004 can be expected. Overall, a minimum decline towards 10333-10004 is expected if I am right at identifying the pattern.

From high 10985, the Impulse completed from 10985-10534 can be marked as wave (a or 1), the bounce from 10534-10923 can be marked as wave (b or 2) [pattern is not clear] and wave (c or 3) may be in progress. Normal 100%-123% projection for wave (c or 3) is placed at 10472-10375.

Now, let’s analyse the progress of wave (c or 3) on separate lowest possible time frame chart.

Elliott wave analysis of Nifty on 15 minute chart

Elliott wave analysis of Nifty on 15 minute chart

This is 15 minutes time bar chart of Nifty covering decline after 10923 which I marked as start of wave (c or 3) on 5 hourly chart.

It seems an impulse completed from 10923-10628 and same can be marked as inner wave (1) of (c or 3).  Wave (2) may be completed from 10628-10870 as Simple Zigzag and wave (3)  may be in progress.

Pattern of wave (3) is not clear yet, but wave (1) from 10923-10628 is about 300 point. So, if wave (1) of (c or 3) is of 300 points then whole wave (c or 3) can be of about 700-900 points (approximate 3 times of wave 1).

The wave counts I marked on this 15 minutes chart will get negated if Nifty breaks above 10923.

Conclusion

For Medium/Long Term: – There was a possibility of Irregular Correction on Daily chart and same was indicating a sharp bounce for new life time high. But the bounce after 10004 is slower when compared to last fall and same is warning cautions for one more low below 10004. So, we need to concentrate on short term outlook until we get clarity in medium term outlook.

For short term: – Slower bounce after 10004 is warning cautions for low below 10004 again, possibility of (ABC) pattern from 10004-10985 is indication decline towards 10333-10004 and big inner wave (1) of (c or 3) on 15 minutes chart (from 10923-10628) is indicating 750-900 points fall.

So, overall conditions are warning cautions for sharp decline towards 10333-10004 soon if I am right at identifying the pattern. The fall can start without breaking above 10923 and very soon because pattern is already stretched a lot.

Otherwise, a big move is expected very soon on either side, conditions are indicating sharp fall but bounce can also be big and quick if I am wrong at identifying the pattern.

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

Trading Points of View:

According to conditions on charts: –

Short term strategy must be “Sell on Rise” when getting opportunity until we get any confident bullish pattern. Naked Buying Positions and Selling in Puts must be avoided for time being.

10600 Put of Jan Expiry is trading around 70, so one can buy this 10600 put in light quantity around 70 using stoploss of 33 expecting decline towards 10333-10004 in coming day’s/weeks.

Those who want to Sell Nifty Futures can sell if get Nifty spot in 10830-10870 range using exact stoploss of 10871 expecting decline towards 10333-10004, otherwise wait for any other low risk opportunity.

Don’t be greedy and trade in comfortable quantity with strict stoploss because the bounce can also be big and sharp if we are wrong at identifying the pattern.

These are low risk trading strategy 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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