Nifty is Preparing for a Good Decline in Coming Days – Elliott Wave Analysis

| March 30, 2016

Nifty opened gap up at 7651 and traded with huge strength for rest of the day. Nifty bounced gradually till 7741 without even a single correction in between and closed huge 138 points up at 7735.

Yesterday I explained 02 conditions. Either Nifty can bounce from 7582-7548 levels or Nifty can bounce above 7652 even if it touches 7626. Nifty opened well above 7626 today and then bounced further to 7741 till now. Practically it may not be a trading day for many as minimum target of 7652 after 7626 was achieved at opening only and further it is not easy to buy after huge Gap up without any correction. So, let’s have a fresh look at latest charts.

Today I am showing Nifty move from 29 Feb 2016 low 6825. Earlier counts you can read in my previous analysis report Elliott Wave Outlook of Nifty for Budget Day 29 Feb 2016 Onward.

Elliott Wave Counts on 30 minutes chart

Elliott Wave Counts on 30 minutes chart

This is 30 minute time bar chart of Nifty covering move from 29 Feb 2016 low 6825.

As I explained yesterday, it seems wave (1) completed from 6825-7094 and wave (2) completed from 7094-6969 then wave (3) started from 6969. Wave (3) started slow but extended sharply later with just 23% correction in between.

The bounce from 6969 is straight with just a 23% correction in between and with unfilled gaps. So, it is difficult to identify waves confidently. It may be wave (3) or inner wave [(iii) of 3] completed at 7539 and wave (4) or inner wave [(iv) of 3] completed at 7405. Now there are 02 conditions on chart: –

  1. If it is wave (4) completed at 7405 then wave (5) already achieved its minimum 38% projection but pattern is not completely clear. Nifty can give 38%-61% correction of whole bounce from 6825-7749 in this case after completion of wave (5) at higher levels.
  1. If it is inner wave (iv) of (3) completed at 7405 then wave (v) of (3) also achieved its minimum 38% projection but pattern is not completely clear. Nifty can give 23%-38% correction of whole bounce from 6825-7749 in this case after completion of wave (5) at higher levels.

As there are 02 possibilities on above 30 minutes chart, we need to analyze and concentrate on bounce from 7405 which is either start of wave (5) or inner wave (v) of (3). We need to identify the completion of impulse from 7405 to catch next decline which could be of minimum 300-450 points.

Elliott Wave Counts on 30 minutes chart

Elliott Wave Counts on 30 minutes chart

This is 15 minutes time bar of Nifty covering decline from 16 March 2016 low 7405.

Pattern for this wave (v) or (5) was not clear yesterday but now it seems wave (1) completed from 7405-7585, (2) completed from 7585-7479 and wave (3) is in progress from 7479.

And within wave (3), it seems inner wave (iii) of (3) completed at 7713, (iv) completed from 7713-7582 as Irregular Correction followed by wave (v) of (3) started from 7582. Wave (v) already achieved 61% projections and in extended zone whereas next 100% correction is placed at 7816.

We cannot assume wave (3) completed at 7749 as Wave (4) will be overlapping wave (2) in this case after breaking below 7585 which is not possible within impulse.

So, we expect a volatile Up-Down-Up move in Nifty coming sessions as wave (3) up, wave (4) down and wave (5) up before start of any reasonable correction.

Conclusion:

For Medium term, Nifty is preparing for a good decline after volatile moves at higher levels. The decline can of minimum 300-450 points from high but we need to wait for identification of wave completion.  Having patience will reward higher as it is not possible to calculate exact higher range for decline now but it may show the signs when actual time comes.

For coming sessions, approximate range of 7600-7800 may be intact as wave counts are suggesting and same I explained in my previous report. There may be wave (3) upward maximum up to 7800-7816 as 100% projection for inner wave (v) of (3) is 7816 and wave (4) downwards maximum till 7586 as start of wave (2) is 7585 followed by a high again as wave (5) before a good decline. There are probabilities based on present conditions.

So for coming sessions, Selling Nifty near 7800-7816 with stoploss of 27 points and buying Nifty on decline near 7600 with exact stoploss of 7585 may be safe and profitable trading strategy. These are just indicative approximate levels based on maximum range whereas exact levels can be identified only when actual time comes.

Any change in wave counts or pattern will be notified in daily Analysis Reports.

Any positional or intraday trade can be done based on above mentioned conditions with strict stoploss. Safe traders avoid any positional longs at these levels.

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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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