Nifty opened flat today and traded with negative bias whole day after initial rise. The day was volatile with many up down swings of 50 points. Nifty closed 21 points down today after registering high of 8326 and low of 8236. I was struggling to find confident wave counts from last 02 days, let us see what is on the charts mow.
This is 5 minutes chart of Nifty covering move after 8066 which I am assuming as the start of an impulse. It seems,
- Wave (1) completed from 8066 to 8138 as Impulsive
- Wave (2) completed from 8138 to 8087 as “abc” corrective that corrected wave 1 by exactly 70%.
- Wave (3) completed from 8087 to 8303 which projected exactly 300% of wave 1.
- Wave (4) completed from 8308 to 8191 which corrected wave (3) by 50%.
- Wave (5) completed at 8356 as Ending Diagonal Triangle which I was expecting in previous report for 13 Jan 2014.
Thus, a 5 wave’s move is completed which formed a complete bigger impulse 1. And the correction for this whole impulse (from 8066 to 8356) is in progress. 38% retracement for this impulse is placed at 8245, 50% placed at 8211 and 61% placed at 8176.
The correction started from 8356 looks like a progress of Complex Correction (Triple Zigzag). We are going to see the progress of this correction closely on separate chart to find estimates for its completion.
Comment on Yesterday’s Analysis:
Yesterday, I was right in identifying that the wave started from 8190 was wave (5) only progressing as Ending Diagonal Triangle but an “Irregular correction” on top created doubt in my mind and I assumed that wave (5) is still in progress and can go till 8360 before sharp decline.
The doubt about “Irregular Correction” at top was valid and was accurate but I skipped the possibilities of “Complex Correction”. The possibilities of “Complex Correction” (Double Zigzag or Triple Zigzag) didn’t click my mind yesterday. But, it happens many times that we failed to identify accurate pattern but we should not lose huge money while trading wrong pattern. Every pattern has a termination point and we exit the trade as soon as we observe abnormalities.
Let us see the decline (correction from top) closely on separate chart:
This is 5 minutes time bar chart of Nifty covering move after Yesterday’s high 8356 which I am assuming as progress of wave 2.
The decline from top looks like a progress of Triple Zigzag Correction (abc -x -abc -x –abc) where (abc -x -abc –x) is completed and last “abc” is in progress. First “abc” cycle in the correction is “Irregular”.
In last “abc” cycle, it seems inner waves (a) and (b) are completed and (c) is pending. Generally wave (c) need to break below last low 8236 whereas 123% and 161% projections for wave (c) are placed at 8228 and 8209 respectively.
Thus, the chart suggests that the end of this Triple Zigzag is very near as only last wave (c) is pending and Nifty can give a good move upside after completion of this correction. The confirmation of completion will be after a break above upper line of wedge joining (x1) and (x2).
Note: “Complex Corrections” and “Ending Diagonals” are most difficult patterns to identify in advance. Though structure of chart is convincing but it may take any shape later. So, observing the latest wave before taking entry is important. Safe traders can wait for upside breakout above upper line of wedge joining (x1) and (x2). We generally see that price never enter into the wedge again after breakout from Triple Zigzag and next move is aggressive.
Read complete details and importance of Triple zigzag in this article: Triple Zigzag Correction of Elliott Wave Theory Explained by Deepak Kumar
Wave’s structure on chart is suggesting a good upside rally above 8445 in coming sessions and bottom seems very near. Buy on dips strategy with stoploss can be followed for good profit in coming sessions. Trade should be only after identifying latest wave and never trade without stoploss.