Nifty is Warning Cautions for Good Decline from 7622-7659 Range – EW Analysis for 18 March 2016 Onwards

| March 17, 2016

Nifty opened gap up at 7557 and bounced till 7585 but failed to sustain at higher levels and declined more than 100 points from high to register day’s low 7479 before closing 13 points up at 7512. Nifty bounced till 7585 but again failed to break 7600-7400 range and closed within 40 points range 7500. Nifty closed within tight range of 7460-7540 from last 14 days. Let’s have a fresh look at latest charts now.

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.

Nifty Elliott wave analysis for March 2016 Expiry

Nifty Elliott wave analysis for March 2016 Expiry

This is 15 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 without even 23% correction in between.

The bounce from 6969 is straight with just a 23% correction in between and with unfilled gaps. So, it is bit difficult to identify waves but most probable counts I have shown on charts. May be it is inner wave (v) of (3) is in progress from 7405.

If inner wave (iv) of (3) is completed at 7405 then minimum 38%-61% projection for wave (v) is placed at 7622-7757 and Nifty can show good decline again after achieving this projection. But we can expect minimum 7622 (38% projection) for wave (5) before decline or until we see any other pattern.

Nifty is still trading in 7400-7600 range from last 14 days and closing just 40 points up or down of 7500.

Let’s have a look at the move after 16 March 2016 low 7504 which I have shown as start of inner wave (v) of 3.

Nifty Elliott wave analysis for March 2016 Expiry

Nifty Elliott wave analysis for March 2016 Expiry

This is 5 minutes time bar chart of Nifty covering move after 16 March 2016 low 7405 which I have shown as start of inner wave (v) of 3.

It may be inner wave (3) completed at 7585 followed by wave (4) completed at 7479 which retraced about 61% (more than normal 38%). Though, I am not convincingly able to identify inner wave (1) and (2) but assuming completion of wave (3) at 7585 because move till 7585 is steep with gap and this wave (v) is still short on minimum 38% projection placed at 7622.

If it is wave (4) completed at 7479 then wave minimum 38%-61% projection for wave (5) is placed at 7547-7590 but wave (5) needs to break above top of wave (3) which is at 7585. Next 100% projection for wave (5) is placed at 7659 whereas wave (5) will be in extended zone after 7590 which again warns sharp decline.

If we look at first 15 minutes chart then minimum 38% projection of wave (v) of (3) is placed at 7622 but if we look at inner waves of (v) then (5) of (v) of (3) needs to be extended to achieve 7622. So, we can expect a good decline after achieving 7622 if we are right at identifying pattern.

Break below 7479 without achieving 7586 will negate the whole pattern I have explained.

Other Possibility: If bounce from 7405-7585 is actually wave (1) and 61% retracement from 7585-7479 is wave (2) then we can see a very sharp bounce above 7659 as wave (3) and can expect much higher levels. But the bounce from 7405-7585 took less than 5 hours time, so wave (3) needs to break above 7659  tomorrow only to justify the possibility of this pattern as wave (3) is normally faster than wave (1).

Conclusion:

Nifty have possibilities to bounce till 7622-7659 range and stoploss for any existing longs must be 7479 now. But there are cautions for sharp decline from highs, may be from 7622-7659 range. Break below 7479 will negate whole pattern which I have explained.

So, extremely short term Nifty trading strategy must be buying on Dips until Nifty achieves 7622 using stoploss 7479 but Wave’s are warning cautions after 7622.

And if Nifty achieve 7622 but failed to break above 7569 tomorrow then a risk can be taken to buy Nifty April 7300-7100 puts positional in 7622-7659 range for some days without any stoploss. I feel safe to buy puts because Nifty can also move much higher if last bounce from 7405-7585 is wave (1). So, buy puts in such quantity so that you will be comfortable with loss even if puts become zero as there is no stoploss for puts.

Any trade on Long side must be Intraday only and with strict small stoploss until we see any convincing bullish pattern.

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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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