Nifty Elliott Wave Analysis of Nifty for 10 Nov 2016 after Huge Gap Down of 500 Points

| November 10, 2016

Nifty opened huge gap down of about 500 points at 8067 and declined further till 8002 but recovered 200 points within 5 minutes and traded with strength for rest of the day. Finally Nifty closed 111 points down at 8432 after registering day’s low 8002 and high 8476. Overall it was a huge range day.

Yesterday, I expected a reversal either from 8453-8400 range Or if Nifty opens below 8400 then also reversal was expected but there was no definite lower range. And safe trading strategy was to buy Nifty if trades above opening price at 9:31 AM with 35 stoploss and hold for next day if close near day’s high.

From last week I was focusing on buying on Dips only and was making safe strategies on buying side only with protection and conditions. On down side, I was just explaining possibilities, levels and cautions but was not preparing any trading strategy or selling.

I was showing possibilities on downside and warning cautions but preparing trading strategies on buying side only because the overall patterns was indicating a high above 8698 in coming days and overall structure of the decline from 8968 was suggesting a sharp reversal whenever it happens.

So, I was trying that we don’t miss this good expected upside because it would not give us chance to buy if we miss it, that’s why suggested to keep 8900-9000 calls in light quantity so that we get something if reversal happen and there was no stoploss for calls because I was not confident about exact lower range. And further, either conditions were not matching for buying or whenever our conditions were matching the personality of the bounce was not confident to support reversal.

Reversal happened but in a style that practically most of us could have missed it even after trying hard for many days. Nifty opened 500 points down and recovered 200 points within 2-3 minutes making a big range difficult to initiate practical trade.

And honestly, it was impossible for me to think of such a big fall of 500 points because I experience this type of pattern first time in my life and I am still figuring it out. I was seeing a possibility of maximum 250 points decline and also gave alert about that a day before and suggested to avoid overnight longs after seeing that personality of bounce is dull but there was no way to predict this 500 points Gap Down by any pattern.

Crash of 26 Aug 2015 I caught perfectly because the patterns was supporting which is explained in the article Does Elliott Wave Theory Predicted The Nifty Crash of 24 Aug 2015  but here I failed to understand any such possibility.

Further our trading plan worked perfectly. Plan was to buy Nifty if trades above opening price at 9:31 AM using stoploss for 35 points because correction has completed its minimum requirement and reversal must be sharper if it has to happen. Nifty opened at 8067, was trading around 8200-8195 (opening opening) at 9:30 AM and bounced without giving 35 points decline after 8200, low was 8177. But practically, low was 200 points down at 9:30 AM so many could not have courage to initiate trade and even I was not comfortable.

Let’s analyze what is further there on charts.

Today I am covering the decline from yearly high 8968 and previous wave counts are explained in my previous analysis report Further Elliott Wave Updates of Nifty for 07 Nov 2016 Onward

Elliott Wave Analysis of Nifty for 10 Nov 2016

Elliott Wave Analysis of Nifty for 10 Nov 2016

This is hourly time bar chart of Nifty covering decline from 8968. I am covering this chart just to show that the possible of “Triple Zigzag” pattern I was explaining in my previous reports is negated because lower line of the pattern (line joining C1-C2) is broken which is not allowed in Triple Zigzag. Breakout must be from upper line joining X1-X2.

I tried to figure out wave counts for this move but I am still struggling to get confident counts. I will explain this whole pattern with explanation in special article in next 1-2 days.

So, today I am analyzing the bounce from 8002 only to get the idea of further immediate movement.

This is 5 minutes chart of Nifty covering move from 9 Nov 2016 low 8002.

Elliott Wave Analysis of Nifty for 10 Nov 2016

Elliott Wave Analysis of Nifty for 10 Nov 2016

The bounce from 8002-8348 looks impulsive and can be wave (1), Nifty covered these 346 points in just 20 minutes. Next decline from 8348-8117 can be wave (2) unless wave (2) is progressing as Irregular correction and this expected wave (2) retraced exactly 50%.

Further wave (3) may be started from 8117 and minimum 100%-123% for wave (3) is placed at 8525-8606 whereas 161% projection is placed at 8740.

And within progress of wave (3), it seems inner wave (i), (ii), (iii) and (iv) is completed and (v) is in progress. Minimum 38%-61% projection for wave (v) is placed at 8533-8716 whereas next 100% projection is placed at 8755. So, 8533 is at least expected on upside.

Stoploss for longs is 8348 which is big. And further for existing long holders if Nifty opens or break above 8500 then trailing stoploss must be 8462.


Nifty opened huge Gap down of 500 points but we can’t consider this huge gap down as bigger wave 3 because wave (3) rarely retrace more than 38% and this gap down already retraced about 80%. So, pattern still looks corrective as we were expecting and there is still a possibility of high above 8968 in coming weeks/months but be cautious before exact pattern is not clear.

For short term, Nifty already recovered 450 points from low so it is a big range now. We can expect minimum 8533-8607 on upside which can further extend towards 8740, so we need to look at the wave pattern in 8533-8607 range for further scenario. And reasonable stoploss for longs comes at 8348 which is way below and big because of huge range.

For Trading Point of View:

If someone is holding longs from lower levels or caught in wrong trades at higher levels can use 8348 as stoploss for existing longs expecting minimum 8533-8607 on upside. This stoploss for longs can be trailed to 8461 if Nifty opens or break straight way above 8500.

Range is very big for any fresh trade. Minimum short term target is 8533 whereas stoploss is 8348, so there is no risk reward for any fresh trade. You have missed the best opportunity because of huge volatility, now you need to wait for small inner wave pattern to form for fresh trades.

Some subscribers asking “How EWT missed this great fall”:

I don’t have any answer for this question because it was impossible for me to predict it. I could have catch it if this 500 points decline happens gradually but a huge gap down was impossible for me to identify. So, it is my failure to predict this huge Gap Down which is natural for me, it is impossible to be right always.

My aim was to catch a big expected move for 8968 and I was trying it boldly with protection and cautions. Nifty may do the same and rise above 8968 but I know that this huge Gap Down had put a good question mark on my Analysis Skills which will take time to recover.

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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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