Nifty can Show 8631-8804 before any Big Correction – EW Analysis on 23 Nov 2014

| November 24, 2014

Nifty broken the range of 8350-8450 on upside formed by Ending Diagonal followed by complex correction in last 12 sessions. Nifty bounced more than 700 points from 7724 without any reasonable correction in between. Maximum correction is just 100 points within this whole rally from 7724 to 8489.

Now, let me explore further possibilities on charts:

Elliott Wave Analysis of Nifty (Chart 1)

Elliott Wave Analysis of Nifty (Chart 1)

This is 15 minutes time bar chart of Nifty covering move from 8290-8489. This chart shows that Nifty completed Ending Diagonal followed by complex correction and next upside wave is already started. 

If you remember, I mentioned in my previous report that Nifty is making complex formation pattern (abc-x-abc-x-abc) and can give bounce of another 250-300 points after completion of this correction. I also identified the completion of this complex correction followed by breakout in my last report but I ignored it because Nifty didn’t touch lower line of Ending Diagonal. And I expected one more down leg at least till lower line of ED (lower red line joining wave 2 and 4). 

We mostly see that correction after Ending Diagonal touches or break below the lower line of ED. But Nifty completed correction without touching the lower line of Ending Diagonal and started moving up. It suggesting two possibilities:

  1. This Ending Diagonal Triangle at top may be inner wave 5 of bigger wave 3 as correction may not touch lower line of Ending Diagonal Triangle if that Ending Diagonal is inner wave 5 of bigger wave 3.
  1. If correction after ED completes without touching lower line, it indicated tremendous strength in market. Thus we can expect big move ahead. 

After analyzing above conditions, it’s the time to see whole move from 7724 now:

Elliott Wave Analysis of Nifty (Chart 2)

Elliott Wave Analysis of Nifty (Chart 2)

This is 30 minutes time bar chart of Nifty covering move from 7724 to 8489.

Identification of Ending Diagonal at top followed by smaller than expected correction is indicating strength and more upside in Nifty. And two conditions mentioned above suggesting end of wave 3 at 8454.

Now, if 8454 is end of wave 3 then we can expect minimum 38%-61% projection for wave 5 which is placed at 8631-8804. Thus, we can expect 8631-8804 for Nifty in near term.

Learning Experience: 

In my previous report I identified the completion of correction but ignored because of other possibility. I am showing previous chart again: 

Elliott Wave Analysis of Nifty

Elliott Wave Analysis of Nifty

This is the chart I shown in my previous analysis report. I show the possibility for completion of complex correction with three ABC cycles (abc-x-abc-x-abc). Possibility is shown by black (x-abc) counts. But I ignored it because this whole correction didn’t even touch lower line of ED which is a general case. 

What you learned? 

  1. It is not necessary that correction after Ending Diagonal Triangle always breaks below its lower line. It is exception but not mandatory rule. 
  1. As I always say, we must consider lowest time frame chart for entry levels and stop loss.

What should be the trade in these conditions when you were not fully sure of completion of correction? 

We could have buy Nifty after breakout from this complex correction (upper black line) with low as stop loss and using trailing stop loss after that as we already expected some bounce. It was the best opportunity as breakout happened at around 8370 and low was 8353. It was best low risk opportunity to buy around 8370 with stop loss below 8353. 

But it is the part of this trading business and analysis; we can never catch every opportunity because of some other factors even if we identify it. We must learn from our previous experience. There is no sure shot opportunity ever and risk is in every trade. We must take risk whenever we see higher rewards compare to the risk.

Elliott Wave Theory is the only tool which indicates the future of market in advance. Nothing is better and more accurate than Elliott Wave Theory to find exact tops, bottoms, perfect entry levels and stoplosses and it works on every time frame including Long Term, Medium Term, Short Term as well as Intraday.

So, Learn Elliott Wave Theory yourself to know the future of Stock Market in advance and to transform your trading into profitable business.

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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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