Nifty can Give Small or Big Bounce After Achieving 10806-10780

| October 3, 2018

Nifty opened lower at 10982 and traded with negative bias and huge volatility. Nifty decline by more than 150 points to register day’s low 10843 and closed 150 points down at 10858 after wild up-down swings.

Yesterday, Nifty was expected to decline towards 10821-10784 from 11035-11145 range in coming sessions. Further bounce of minimum 160-250 points was expected after achieving 10821-10784 range.

Trading strategy was to sell in 11035-11145 range for targets 10821-10784 and then buying again if gets in 10821-10784 range expecting bounce of minimum 160-250 points bounce. Buying options was advised because of big stoploss. Nifty declined to register low 10843 with huge volatility. Now, let’s have a fresh look at latest charts for further scenario.

This analysis report is covering decline from all time high 11760 because previous wave counts are explained in my last analysis report Elliott Wave Analysis Report of Nifty for 01 Oct 2018

Nifty Elliott wave analysis on hourly chart

Nifty Elliott wave analysis on hourly chart

This is hourly time bar chart of Nifty covering decline after 11760 which I am analyzing independently because there is bit confusion on higher time frames. There is no change in wave counts on this chart.

There is impulse completed from 11760-11269 and same can be assumed as wave (A), Irregular Correction from 11269-11523 can be marked as wave (B) and wave (C) may be in progress.

Within wave (C), it seems inner wave (i), (ii), (iii) completed till 10866, (iv) may be completed at 11191 and (v) may be in progress. Wave (v) already achieved its minimum 38% projection and next 61% projection is placed at 10784 which may or may not be achieved.

Pattern of wave (v) looks like an Ending Diagonal Triangle, so let’s analyze the progress of wave (v) of (C) started from 11191 on separate chart.

Nifty Elliott wave analysis on 15 minute chart

Nifty Elliott wave analysis on 15 minute chart

This is 15 minutes time bar chart of Nifty covering decline after 11191 which I am expecting as start of wave (v) of (C) on hourly chart.

This decline also consists of repeated (abc) waves, and the same is indicating that wave (v) of (C) is progressing as Ending Diagonal Triangle.

So, inner wave [1] of ED may be completed from 11191-10882 as (abc) wave, [2] may be completed from 10882-11145 as Simple Zigzag Correction, wave [3] may be completed from 11145-10821 (achieved 100%-123% projection), wave [4] may be completed from 10821-11035 (pattern not clear) and wave [5] may be in progress from 11035.

Minimum 61%-100% projection for wave [5] is placed at 10806-10665. So, 10806-10665 is minimum target range for completion of wave [5] but it cannot break below the extended line joining wave [1] and [3] (lower red line). Lower red line is around 10790-10780, so wave [5] can completed somewhere in 10806-10780 range if I am right at identifying this ED.

The wave counts shown on this chart will get negated if Nifty breaks below the line joining wave [1] and [3] of ED (lower red line).

Completion of Ending Diagonal pattern will complete wave (C). So, we can expect a small or big bounce after completion of ED, bounce can be of minimum 160-250 points [23%-38% retracement of wave (C)] of towards new all time high.

Conclusion

There is no change in wave counts and pattern, there is possibility of Ending Diagonal started from 9687 but it is just a possibility for awareness and not confirmed yet. But if this is really an ED and running since 1 year then coming months are going to be tough with lots of confusions because Diagonal Triangle is a complex pattern and last phase of ED is known for abnormal moves. So, I will keep watch on this possibility and will update as required.

(Another small Ending Diagonal Triangle is in progress at bottom after 11191 and you already observed wild volatile swings within this small ED since last week. This is just a small ED of 400 points and Nifty is giving wild Up-down swings of 100-200 points every day. So, you can imagine how volatile Nifty can be if the pattern started after 9687 is a progress big Ending Diagonal Triangle pattern of more than 2000 points.)

For very short term/Intraday, again there is a possibility of ED at bottom started from 11191 which is within inner wave [5] and expected to complete somewhere in 10806-10780 range. Actually, lower line of ED is maximum limit for wave [5] which is around 10790-10780 and this line will move lower with the time. We need to watch this line for exact pattern negation point (Refer 15 minutes chart).

So, 10806-10780 is estimated end of ED and there is possibility of minimum 160-250 points bounce after completion of this ED. Nifty must touch 10806 to complete ED, otherwise any bounce without touching 10806 can attract selling again. 11035-11145 is short term resistance but this resistance will not be valid after achieving 10806.

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

Note: I posted this analysis report for my book subscribers for future reference because there is possibility of important complex pattern Ending Diagonal triangle (ED) in this report.  But, I am not sharing trading strategies for the interest of my paid clients.

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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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