Nifty opened flat at 9144 and bounced to register day’s high 9160 but failed to sustain at higher levels and traded with negative bias for rest of the day. Nifty decline about 40 points from day’s high to register the low 9120 before closing 11 points down at 9139.
Friday, a bounce above 9273 was expected without breaking below 9131 and suggested to buy Nifty on decline using stoploss of 9130. And further suggested to buy both Nifty May 9400 Call and May 8900 put in equal quantity if Nifty breaks below 9131. Stoploss for longs at 9130 was triggered and hedge trade is active. Both May 9400 Call and 8900 Put is trading at 45 and trade may have activated with combined premium of 92-95 points. Let’s have fresh look a latest charts for further scenario.
Today I am covering bounce from 03 Mar 2017 low 8860 and earlier wave counts are explained in my previous analysis report Elliott Wave Analysis and Outlook of Nifty for 03 April 2017 Onward
This is hourly time bar chart of Nifty covering bounce from 8860 which I am expecting as start of new impulse on 2nd daily chart on all time frames report.
May be an impulse is completed from 8860-9273 is completed and further correction may be started. Pattern of inner wave (v) is not clear but it achieved more than 61% projection and inner waves are overlapped. So, we need to concentrate on the decline from 9273 until we get clarity on bigger pattern.
Note: In my last report, I had explained that wave (v) is not completed, just inner wave (3) may be completed and (4) in progress but yesterday wave (4) overlapped wave (2) in that case after break below 9131. So, we need to leave that pattern for a while and wait for the clarity.
So, let’s have a closer look at decline from 9273 to see if we can conclude something.
This is 15 minutes time bar chart of Nifty covering decline from all time high 9273.
The pattern of decline is not completely clear but there is repeated overlapping within the decline. So, this decline with overlapping of wave can either be a Complex Correction (most probably Double Zigzag as marked on chart) OR it can be repeated downward impulses followed by upward correctives (rare possibility).
I marked the possibility of Double Zigzag on the chart which is most probable condition at this moment of time, please look carefully wave counts. 38% retracement of last wave (c) in this case is placed at 9160 which we can refer as short term reversal point.
Overall, there is a possibility of either a good bounce (if the decline from 9273 is Complex Correction) OR a very sharply and steep decline (If the waves within decline from 9273 are repeated downward impulses followed by upward correctives). And we can use these conditions to make a hedged trade.
Nifty registered a life time high with extended waves couple of weeks back but declining very slowly and gradually from top. Normally the reversal after a new high and after extended waves is sharp and fast but Nifty is declining very slowly and gradually which is the point of confusion.
On the other hand, the pattern of decline from 9273 doesn’t seems impulsive, this pattern seems corrective but without the clarity in pattern.
The only thing we can conclude is that Nifty has possibility to give a good move either side very soon. We can see a good bounce above 9273 and sharp decline towards 9019 very soon and we can use this possibility to initiate a hedged trade until we can clarity of exact pattern.
Trading Point of View:
As the exact pattern is not clear and there are some confusions and we can only conclude that Nifty has possibility to give a good move either side very soon, we can concentrate on hedged trade only until the clarity in pattern comes.
So, Nifty May 9400 Call and May 8900 Put bought in equally quantity yesterday can be hold till further updates. Both 8900 Put and 9400 was available at combined premium of 92-95 points yesterday and closed at combined premium of 90 (both 9400 Call and 8900 Put closed at 45).
Any one sided trade can be decided after getting the clarity of pattern only because we already had 2-3 wrong trade recently.
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