Nifty can Decline Towards 10759-10585 from 10896-10982

| February 25, 2019

Nifty opened higher at 10813, registered low 10788 but bounced back by about 100 points to register day’s high 10887 and closed 88 points up at 10880.

Yesterday, Nifty was in short/Medium term negative zone with possibility of decline towards 10534-10333 in coming days. 10810 was still the overall upside breakeven point whereas 10746 was downside breakeven point.

Trading strategy was to hold Nifty shorts taken 10790-10810 range using same stoploss of 10831 or sell fresh after break below 10746. Nifty broke 10810 at opening, stoploss of 10831 was triggered and Nifty bounced further till 10887. 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.

Nifty targets of 28 Feb 2019 Expiry
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. This is the same chart with explanation which I had explained in my last analysis report because 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 ‘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

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. There is no change in wave counts. Again, there is no change in wave counts on this chart.

From high 10985, the downside Impulse completed from 10985-10534 can be marked as wave (A). Irregular wave (B) may be completed from 10534-11118 with inner wave [a] from 10534-10923, [b] may be completed at 10923-10583, [c] from 10583-11118 and wave (C) may be completed at 10585 or still in progress.

Wave (C) started from 11118 must be Impulse. Normal 100%-123% projection for wave (C) is placed at 10667-10560 and Nifty already entered in this range, so wave (C) already achieved minimum projections.

Normally, wave (C) of Irregular correction completed near the after the end of wave (A). End of wave (A) is 10534, so we can expect wave (C) to complete near 10534 or below.

If we assume the bounce from 10004-10985 as impulse then its inner wave (v) is extended and start of extended wave (v) is 10333. Extended wave (v) often retraces 100%, so we can expect fall towards 10333.

After combining all the conditions and personality of move on this chart, wave (C) achieved its minimum projection but other conditions are indicating the possibility of fall towards 10534-10333.

BUT, Wave (C) registered low 10585 and retraced by more than 38%, so we need to analyze the progress of wave (C) separately on lowest time frame chart to check if an Impulse pattern is completed or not.

Elliott wave analysis of Nifty on 30 Minute Chart

This is 30 minutes time bar chart of Nifty covering decline after 11118 which I marked as start of wave (C) of Irregular Correction on 5 hourly charts.

There is change in wave counts because the decline from 11118-10620 is sharp, there is possibility of Irregular Correction at bottom and Nifty wave (C) retraced by more than 38% after breaking above 10810. I tried to mark most probable wave counts keeping all conditions and calculation in mind.

May be an Impulse is already completed from 11118-10620 with highly extended inner wave (v) and same we can mark as wave (A or 1). There is possibility of Irregular Correction after 10620 and same can be assumed as progress of wave (B or 2).

38%-61%-78% retracement of wave (A or 1) is placed at 10810-10927-11011 whereas as 10810 is already achieved. So, wave (B or 2) can complete somewhere near 10927-11011 followed by decline for new low below 10585 as wave (C or 3).

Now, let’s analyse the progress of wave (B or 2) separately on lowest possible time frame to calculate its estimated completion range.

Elliott Wave Analysis of Nifty on 15 Minute Chart

This is 15 minutes time bar chart of Nifty covering move after 10620 which I marked as start of wave (B or 2) on 30 minutes chart.

Wave (B or 2) looks like an Irregular Correction (5-3-5) with inner wave (a) completed from 10610-10759, irregular (b) completed from 10759-10585 and wave (c) may be in progress.

Within wave (c), it seems wave (1) completed from 10585-10696, wave (2) may be completed from 10696-10647, wave (3) may be completed from 10647-10808, wave (4) may be completed from 10808-10759 and wave (5) may be in progress.

Wave (3) of (c) is projected less than 161%, thus not extended. So, wave (5) needs to be extended. Minimum 61%-100% projection for wave (5) is placed at 10896-10982, so 10986-10982 is minimum range for completion of wave (5) of (c) of (B or 2). 100% projection for wave (5) is a rare case, so wave (B or 2) may complete below 10982 or 10982 can be assumed as maximum range for wave (B or 2).

Inner wave (5) of (c) started from 10759 will be extended, so Nifty can decline sharply towards 10759 after completion of wave (5).

Conclusion

For Medium: – There is no change in medium/long term outlook, most of the conditions are still favouring fall towards 10534-10333 in coming days because of Irregular Correction at bottom but resistance is moved to 10896-10982 and breakeven point is moved to 10982. Overall, Nifty has possibility to decline towards 10534-10333 from 10896-10982 range without breaking higher above 10982.

For short term: – Nifty broke breakeven 10810 and bounced till 10887 but 10896-10982 is next strong resistance and Nifty can decline towards 10759-10585 again from 10896-10982 range. 10982 (some points above 10982) can be used as stoploss for shorts.

10856-10838 is immediate support and 10838 is immediate downside breakeven point and Nifty if breaks below 10838 can result in further fall towards 10759-10585.

Note: – Minimum decline towards 10759 is still possible even if I am wrong at identifying the Irregular Correction at bottom because the pattern of bounce from low 10585 is Impulse and inner wave (5) of this impulse is going to be extended. Extended wave (5) mostly retrace 100%, so we can expected sharp decline towards start of extended wave (5) after its completion.

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

Trading Points of View:

Short/medium trading strategy must be “Selling on Rise” with stoploss above 10982. Nifty can decline towards 10759-10585-10333 from 10896-10982 range. But 10896-10982 is big resistance range, so stoploss will be big if we sell in this range.

Safe traders can sell if get in 10960-10982 range (near max upside limit) with stoploss of 11001 or can wait for break below downside breakeven point 10838 to sell Nifty. Experienced and professional traders can manage their own trade according to levels.

Nifty has possibility to decline towards 10534-10333 but I am keeping 10759 as minimum downside target because possibility of decline towards 10759 will still be there even if I am right as identifying the pattern.

I am not comfortable in any Intraday/Positional Buying because Nifty is already near minimum upside target 10896. But those who want to buy by their own then 10856-10838 is low risk buying range and 10838 (some points below 10838) is stoploss.

These are low risk trading strategies I can suggest in such conditions in advance, otherwise traders can plan their own trades 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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