Nifty Can Decline Towards 10585 Soon – Elliott Wave Analysis

| August 4, 2019

Nifty opened lower at 10930 and bounced further to register day’s low 10848 but bounce by more than 230 points to register days’ high 11080 and closed 17 points up at 10997.

Friday, overall Nifty was in negative zone and has possibility to decline towards 10585-10004 in coming days. 11071-11193 was major upside resistance.

Trading strategy was “Selling on Rise” whenever getting opportunity as long as Nifty is trading below 11193. We identified 02 selling opportunities during market hours and same were updated through Live Updates. Stoploss of 28 points for 1st trade was triggered whereas 2nd selling trade taken at 11012 is still open. 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

This is daily time bar chart of Nifty covering bounce after low 6825 which I marked as start of wave [5] on daily chart in my last “All Time Frames” Report. There is no 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 [iii] of [5] is completed at 11171 and [iv] may be completed at Irregular Correction at 10004 and wave [v] may be in progress. Wave [v] achieved minimum projections after breaking above 11761 whereas next 61% projection is placed at 12689 which may or may not be achieved. Wave [v] achieved 12103 but pattern doesn’t seem completed.

So, let’s analyse the progress of wave 5 started from 10004 separately to calculate internal moves.

Elliott wave analysis of Nifty on Daily Chart

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

The bounce from 10004-12103 is confirmed as (abc) move because of overlapping of waves after break below 10985. Now we have 02 possibilities on this chart.

  1. The (abc) bounce from 10004-12103 is inner wave [1] of Ending Diagonal Triangle for wave [v]. If this is the case then Nifty can decline towards 10585 to complete wave [2] of ED and later Nifty can bounce slowly with volatility for new high to complete wave [3], [4] and [5] of ED. Possibility of ED will get negated if Nifty breaks below 10004 (end of wave [1]).
  • The (abc) wave completed from 10004-12013 is wave (B) of Irregular Correction. If this is the case then Nifty can decline towards 10004 to complete wave (C) of Irregular Correction followed by new quick Bullish Rally for new high.

Now, 11050-11175 is major resistance and 11175 is upside trend reversal point. Nifty had possibility to decline towards 10585-10004 as long as trading below 11175. We can think of any upside reversal after break above 11175 only. Reason for this resistance 11050-11175 is explained on next chart.

Elliott wave analysis of Nifty on Hourly Chart

This is hourly time bar chart of Nifty covering bounce after all time high 12103 which I am expecting as start of wave [2] of ED or (C) of Irregular Correction on Daily Chart. There is slight change in wave counts.

It seems wave (a or 1) completed from 12103-11625, wave (b or 2) completed from 11625-11981 as Double Zigzag Correction and wave (c or 3) may be in progress. Pattern of wave (a or 1) is not clear.

Within wave (c or 3), it seems inner wave (i) completed at 11461, (ii) completed at 11706 as Double Zigzag Correction, (iii) completed at 11848, (iv) may be completed at 11080 as Simple Zigzag Correction (v) may be in progress.

Minimum 38%-61% projection for wave (v) is placed at 10647-10379. So, 10647-10379 is minimum target range for completion of wave (v) of (c or 3).

23%-38% retracement of wave (iii) of (c or 3) is placed at 11050-11175. So, 11050-11175 is still major resistance and Nifty already entered in this resistance with Corrective Simple Zigzag pattern and declined back. So, may be the further downward journey for 10647-10379 is already started.

Important Observation: All the correction till now for wave (b or 2), (ii) and [4] are Complex and Slow Correction. So further upside Corrections for wave (iv) and (4) can be expected as Simple/Irregular and faster Corrections.

Now, let’s have a separate look at bounce after Friday’s low 10848 to check of pattern of wave (iv) is already completed or still pending.

Elliott wave analysis of Nifty on 5 Minute Chart

This is 5 minute time bar chart of Nifty covering bounce low 11848 which I market as start of inner wave (iv) of (c or 3) on Hourly Chart.

It seems inner wave (a) completed from 10848-10961, (b) completed from 10961-10904 and wave (c) completed from 10904-11080. Later, 38% retracement of wave (c) is broken. Inner wave (v) of (c) was extended and same was retraced 100% with speed.

So most of the conditions are indicating that wave (iv) completed at 11080 as Simple Zigzag Correction and wave (v) for 10647-10379 is already started.

Nifty declined from 11080-10968 after completion of wave (c) and 61% retracement of this decline is placed at 11037. Earlier downside breakeven point was 11012. So, 11012-11037 can act as immediate upside resistance, Nifty already entered in this resistance after registering low 10968.

Conclusion

Overall, major trend reversal point 11523 was broken and Nifty is in medium term negative with possibility of further decline towards 10585-10004. 11050-11175 is major resistance and 11175 is major upside breakeven point. Nifty if breaks and stay above 11175 can result in further bounce towards 11706-11981 otherwise Nifty is going to decline further towards 10585-10004.

Nifty already entered in resistance 11050-11175 with Corrective Simple Zigzag pattern and declined back. So, may be the further downward journey for 10647-10379 is already started.

For Intraday/short term, 11012-11037 is immediate resistance and further decline towards 10848-10647-10379 is possible. Nifty already entered in resistance 11012-11037 so it is not necessary to enter in resistance again. 11061 can be used as stoploss for shorts, and we need check pattern again if Nifty breaks above 11080.

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

Trading Points of View:

There is possibility for further decline towards 10585-10004 with 11050-11175 as major resistance. So short term trading strategy must be “Selling on Rise” whenever getting opportunity with small stoploss as long as Nifty is trading below 11175.

For Intraday or Very Short Term, trading strategy is to hold Nifty Shorts/Puts taken in 11012-11040 range or Sell Fresh if get in 11012-11037 range using exact stoploss of 11061 expecting decline towards 10848-10647-10379. We need to manage trade with trailing stoploss after achieving every downside target.

Furthermore, focus must be on “Selling on Rise” as Long as Nifty is trading below 11175 and need to manage trades with trailing stoploss because there is possibility of decline towards 10585-10004 and decline can be sharp and fast if it has to happen. Nifty may not give chance to enter if we miss the chance. Even some stop losses may triggers because of volatility. So, be prepared to tackle huge volatility now on.

Further, I will update about formation of any important internal pattern or any change in trend/pattern/important levels or fresh support/resistance/breakeven point during market hours by WhatsApp Broadcast to all my “Nifty Live Updates” subscribers.

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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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