Nifty opened mild gap up at 8721 but declined sharply just after opening and registered day’s low 8663 followed by range bound consolidation between 8670-8700 for rest of the day. Finally Nifty closed 17 points down at 8691.
Yesterday, a small or minimum correction was expected minimum towards 8681-8648 and trading strategy was to sell Nifty if fails to trade above opening point at 9:31 AM using stoploss of day’s high (made till 9:31 AM) for targets 8681-8648. Nifty opened at 8721 and was trading around 8701-8705 around 9:31 AM (below opening point) and further declined till 8663. Let’s have a fresh look at latest charts for further scenario.
Today I am covering decline from yearly high 8968 whereas previous wave counts are explained in my previous analysis report Elliott Wave Updates of Nifty for 18 Oct 2016.
This is 30 minutes time bar chart of Nifty covering decline from 8968. Again I am not making any wave counts on this chart but just showing the structure of this move without calculations.
There is overlapping of waves within this decline which generally indicating it as some type of Corrective pattern, may be complex correction pattern. And if the pattern of decline from 8968 is actually corrective then Nifty have to register one more high above 8968 sooner or later but cannot say from where or by which pattern.
And if you look carefully at lines drawn on chart then upper line is broken (marked by circle) but price again entered below the line, which indicates that either this pattern is not “Triple Zigzag” OR it is not yet completed if it is progressing as Triple Zigzag.
Overall from this chart, high above 8968 is expected in coming day’s/weeks but we can’t conclude if from present levels or after registering a new low below 8506. So, we need to concentrate on very last bounce from 8506 to prepare further trading plans.
This is 5 minutes time bar chart of Nifty covering bounce after 17 Oct 2016 low 8506.
The inner waves of first bounce from 8506-8594 are not clear but it can be wave (1) because next bounce from 8570 is bigger, sharper and carrying the personality of wave (3).
If we look at bounce after 8570 then it looks like progress of an impulse with inner wave (i) from 8570-8596, (ii) from 8596-8587 and (iii) may be completed from 8570-8698 but the whole pattern after 8698 looks like a combination of repeated (abc) waves, please read the chart carefully.
But, very last upside wave from 8652-8736 looks like an impulse which may be some sort of wave (5). So may be wave (3) or whole impulse is already completed at 8736 which I am not able to identify by inner waves. If wave (3) or whole impulse is already completed from 8506-8736 then 23%, 38% and 61% retracements of whole wave are placed at 8681, 8648 and 8593 respectively whereas 23% is already achieved.
And further, nature of the decline from high 8736-8663 is not suggesting any big fall (will be explained on next chart). So, a high above 8736 is again expected in coming sessions unless there is any drastic change in the pattern.
Now, let’s have a separate look at the decline from 24 Oct 2016 high 8736.
This is again 5 minutes time bar chart of Nifty covering decline from 24 Oct 2016 high 8736.
The decline from 8736-8663 looks like a three wave’s move which may be waves (A or 1), (B or 2) and (C or 3). The pattern of this decline may be confirmed as (ABC) if Nifty even touches 8702 because wave (4) can not overlap (2) and 8702 is start of wave (2) in this case. So, there may not be any big fall soon because wave (3 or C) which is known to be bigger and faster is already completed.
And further if we look at the bounce from 8663 then the first bounce from 8663-8700 may be wave (a or 1), decline from 8700-8672 may be wave (b or 2) though it is very sharp (it can also be wave ‘a’ of correction) and further bounce from 8672 may be progress of wave (c or 3).
And with in wave (c or 3) from 8672, there is ED like structure at top and upper line of which is around 8702 at present and breaking of this line may give confidence for good bounce above 8736. So, we need to keep this upper line in mind to prepare tomorrow’s trading plan.
For Medium Term again, conditions are suggesting a new high above 8968 sooner or later but we can’t conclude if straightway from here or after registering new low below 8506. We need to trade with proper risk management to catch this move.
For short term also, high above 8736 is expected again in coming sessions from present levels of after a dip towards 8648-8593. And for Intraday tomorrow, Nifty even if touch 8705 can further bounce further above 8736. And we need to keep these conditions in mind to prepare further trading plan.
For Trading Point of View: –
For Medium Term, If Nifty decline towards 8648-8593 range then Nov 8900-9000 Calls can be bought without stoploss for some days till further updates. Buying Calls is safe because a very important even “US Presidential Election” is schedules on 08 Nov, so “India VIX” and “Implied Volatility” is expected to rise as event comes closer which further can help in Increase of options premium. But trade must be in such quantity so that you will be comfortable with the loss even if 8900-9000 Calls becomes Zero.
For Intraday Tomorrow, Buy Nifty only if touched 8705 with 30 points stoploss expecting targets above 8736 which further can extend towards 8800-8968. Keep trailing stoploss of 30 points from every high and hold position unless trailing stoploss triggers. Wait for Dip towards 8648-8593 to take Nifty 8900-9000 calls if Nifty fails to break above 8705.
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