Nifty can show 8452-8066 without breaking above 8911 – EW Analysis on 01 Feb 2015

| February 1, 2015

Nifty opened gap up on Friday but declined sharply just after open and traded with negative bias for whole day. Nifty opened at 8996 but never touched this again throughout the day and fell 220 points from high till end of the day. The overlapping of waves on top and highly exteneded  waves were already suggesting this type of fall. Nifty closed  143 points negative at 8808 after registering the high of 8996 and 8775.

Nifty charts has given some indications, so we need to see bigger time frame chart from low of 5118.

Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is daily time bar chart of Nifty showing move after Aug 2013 low of 5118.  It seems:

  • Wave 1 completed from 5118 to 6343 as clean impulse
  • Wave 2 completed from 6343 to 5933 as Irregular Correction which corrected wave 1 by only 33%.
  • Wave 3 completed from 5933 to 8996 which projected by 250% of 1. Thus, wave 3 is extended and we can expect 23% to 38% correction for wave 4. I will explain further why I am assuming wave 3 completed at 8996. Inner wave (5) of 3 is highly extended and completed as Ending Diagonal Triangle.

If wave 3 is completed at 8996 then normal correction we can expect for wave 4 as 23% to 38%. 23% placed at 8273 and 38% placed at 7825. Wave 4 can end before 23% also, I am just indicating normal correction ratios and exact levels van be seen after seeing live waves.

Let me show only wave 3 started from 5933 closely on separate chart with internal waves and calculations:

Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is again daily time bar chart of Nifty covering move after 5933 which I am expecting as start of inner most wave 3 shown. This chart is not latest but taken from previous reports of 23 Jan 2015.  This chart is just to show the internal structure of wave 3 started from 5933 where:

  • Wave 1 completed from 5933 to 6819
  • Wave 2 completed from 6819 to 6639 as Irregular Correction.
  • Wave 3 completed from 6639 to 7563 projected only 100% of wave 1. Thus not exteneded and we can expected wave 5 as extended to project above 61%.
  • Wave 4 completed from 7563 to 7118 as Simple Zigzag Correction.
  • Wave 5 completed at Friday’s high 8996 (not shown on this chart) which project above 100% and is highly extended. Normally, extended 5th wave corrects 100% but it is not compulsary if that extended 5th wave is inner wave (5) of  3. We generally see lower corrections and higher extension within wave 3. So, correction may be approx 23% to 38% of whole wave 3.

Let me show you the inner wave (5) of 3 as ED started from 7118 on separate chart:

Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is again daily tme bar chart of Nifty covering move after 7118 which I am expecting as start of inner wave 5 as Ending Diagonal Traingle. Ending Diagonal Triangle have internal structure of (3-3-3-3-3) or (abc-abc-abc-abc-abc) where waves 1, 3 and 5 must be Simple Zigzag (abc) and wave 2 and 4 can be any of Simple Zigzag or other complex correction.

It seems this Ending Diagonal is completed on Friday at 8996 as shown on chart. The internal structure of wave is satified at Ending Diagonal Triangle. Wave 5 of this ED projected more than 100% thus became highly extend. Generally we see correction after completion of ED breaks the lower line of wedge (line joining wave 2 and 4) or till the start of very last wave (c ) of 5 of Ending Diagonal. Start of very last wave (c ) is 8066. Nifty may complete correction well above 8066 too as it is an ED within wave 3. We need to see progressing waves of this correction later. Let us see last wave (iv) of ED started from 7724 on separate chart.

Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is again daily time bar chart of Nifty showing move after 7724 which I am expecting as start of wave (5) of Ending Diagonal. As we can see, the move from 7724-8626 looks like impulsive rather than (abc). So it can be taken as inner wave (a) of 5 followed by failure wave (b) from 8626-8066. I am calling it failure wave  (b) because inner wave ‘c’ of (b) failed to break the end point of (a)  and is less than 61% of ‘a’.

Very last wave (c ) seems completed at Friday’s high 8996 with another smaller ED at top. Wace (c ) carrying all the personalities of an clean impulse, is faster  than (a) and also projected more than 100% of (a). Let me show you this very last wave (c ) on separate chart on lower time frame.

Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is 15 minutes time bar chart of Nifty covering move after 8066 which I am expecting as very last wave (c) of ED. it seems,

  • Wave (1) completed from 8065.89 to 8355.90 as Impulsive
  • Wave (2) completed from 8355.90 to 8236.75 as “abc” (Double Zigzag) corrective that corrected wave (1) by just 40%.
  • Wave (3) completed started from 8236.70 to 8526.84 which projected exactly 100% of wave 1. Thus wave (3) is not extended and next wave 5 can go extended to achieve minimum 61% projection.
  • Wave (4) completed from 8526.84 to 8452 which corrected wave (3) by 23%.
  • Wave (5) started from 8452 which projected more than 100% and is highly extended. We can see an Ending Diagonal like structure at top as inner wave (v) of (5). Let’s have a close look at wave (5) started from 8452.
Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is 15 minutes time bar chart of Nifty showing move after 8452 which I am expecting as start of wave (5) of (c). I also had shown inner waves and structure of ED at top. This structure and wave’s formation suggests that the top of this wave may be achieved.

Now we need to see the fall after high 8996 to conclude what is there for Nifty in next sessions.

Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is 5 minutes time bar chart of Nifty covering move after Friday’s high 8996. It seems wave (a) of correction from top is in progress as downward impulse and inner wave (4) of this impulse is completed.

Wave (3) projected 361% of (1), thus highly extended and wave (4) also corrected wave (3) by 23% exactly.

Wave (4) looks like a Triple Zigzag Correction which suggests that more lower levels are pending. If wave (4) completed at 8824 then wave (5) is expected to fall till 38% to 61% which is placed at 8738 and 8668 respectively.

Let’s see structure of wave (4) if it is Triple Zigzag:

Elliott Wave Counts of Nifty

Elliott Wave Counts of Nifty

This is 5 minutes time bar chart of Nifty showing last move. We can see a Triple Zigzag correction at bottom with (abc -x -abc -x -abc) structure. We can sell Nifty after breakout from lower line (around 8806) of wedge (line joining X1 and X2) with stoploss just above the breakout line as price rarely goes into the wedge again after breakout from Triple Zigzag.

Conclusion:

The whole scenario on charts is suggesting that Nifty can correct till 8452 -8066 before any further high above 8996. The medium term view is negative but short term bounces may be there during wave (b). The strategy should be selling on rise with strict stoploss after identifying smaller wave’s pattern. Avoid big position in options and trade with stoploss only.

This EW analysis report of Nifty is a part of 02 months FREE service for my book 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"

Comments (10)

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  1. Rakesh says:

    Sir I hav one question that how much time this wave 4 should take to complete and what is the tgt of wave b after completion of a at 8666. Thanks

  2. Rakesh says:

    Eye opening analysis mr deepak , great job .

  3. Himanshu vyas says:

    Thanks Deepakaji

  4. jagannathan says:

    If wave 3 is completed at 8996 then normal correction we can expect for wave 4 as 23% to 38%. 23% placed at 8273 and 38% placed at 8725. Wave 4 can end before 23% also, I am just indicating normal correction ratios and exact levels can be seen after seeing live waves.
    In the above you have mentioned 23% as 8273 and 38% as 8725.Is it correct?I feel there is a error.Either 8273 is wrong or 8725 is wrong.

  5. Pradeep says:

    Dear Deepak,
    Is it good to Take 8800 PE for Feb series , for at lease 50 % profit ?

    • Deepak Kumar says:

      Dear Pradeep,

      Please take your own decision in trading. I don’t like to advice trades, I just teach how you can take decision yourself. Personally, I avoid trading in options during corrections.

  6. gopichand says:

    Deepak ji , it is not ending diagonal , it is leading diagonal. in ed ending will be narrower than the beginning, is it correct ?

    • Deepak Kumar says:

      Dear Gopichand,

      I don’t think there is any criteria for Ending Diagonal or Leading Diagonal based on Contraction Triangle of Expanding Triangle. I have seen both ED and LD as contracting as well as Expanding. Ans a Leading Diagonal is always wave 1 which comes after a correction, So, big LD can not start at the top.

      May be some one who said “Ending Diagonals contract at the end” may clear your doubts better.

  7. KAMAL KANT says:

    Dear Deepak,

    Kindly send your subscription information to my email.

    Thanks