Nifty May Start Correction From 8359-8418 Range – Elliott Wave Analysis for 03 Nov 2014

| November 2, 2014

Nifty bounced 605 points in last 10 sessions and rising with the average of 60 points per session without any reasonable correction. Only a 23% correction was there in between but Nifty gave another 100% move after that. Now Nifty is at very crucial situation that I am going to explain on chart. Let’s see the bigger time frame first.

Elliott Wave Analysis of Nifty

Chart 1

This is daily time bar chart of Nifty showing move after 7118 progressing as Ending Diagonal. Read Elliott Wave Analysis of Nifty for All time Frames Dated 18 Oct 2014 to know why I am taking it as ED. After the completion of wave (4) of ED at 7724, I expected the minimum targets 8380 for wave (5) in ABC patterns as wave 3 was only 110% of 1 (not extended) and we can expected wave 5 as extended which has to project minimum 61% and maximum can go till 100% and above. Wave 5 can go comfortably till 8380 now or after a correction and higher possible levels for this full wave (5) are 8468 and 8786. We need to see the move after 7724 closely to identify the further scenario.

Elliott Wave Analysis of Nifty

Chart 2

This is 15 minutes time bar chart of Nifty covering move after 7724. After seeing this chart, three possibilities are arising there:

  1. 1st (marked by red digits), Wave 3 completed at 8064 by seeing its personality (as I was counting in my previous reports) and wave 5 started from 7986 which extended to 100% projection till now. Thus, it is a highly extended 5th wave. In this case, there may be a sharp correction till 8020 and below after completion of this wave as extended 5th wave corrects 100% most of the time and wave 5 steeper than wave 3 is always dangerous. 100% projection for wave 5 placed at 8326, 123% placed at 8406 and 138% placed at 8455.
  2. 2nd (marked in blue letters), Wave (a) completed at 8064 and wave (c) started from 7986 which extended to 100% projection of wave (a) till now. Nifty move supporting this possibility as wave (c) is faster than (a) here but with only 23% correction as wave (b). In this case, Nifty needs to show at least 8380 and we can see bigger correction after that to break below lower line of Ending Diagonal on (Chat 1). There will be the end of Ending Diagonal after completion of “(c) in this case followed by next bigger correction.
  3. 3rd (marked as brown digits), if it is wave (1) completed at 8064 and wave (3) started from 7986 then we can see much higher levels for this full impulse.

Now, we need to see the inner waves of move after 7986 for more accuracy and confirmation:

Elliott Wave Analysis of Nifty

Chart 3

This is 5 minutes time bar chart of Nifty showing move after 7986. If I count inner waves of this move, it seems waves (1), (2), (3) and (4) are completed and wave (5) is again highly extended above 100%. I also labeled minor and minute degree inner waves here and if you see closely, every lowest, lower and higher degree wave in this impulse is highly extended.

Higher degree wave (3) from 7995 to 8167 extended massively 561% of 1 (which is the last ratio of extension on my Fibonacci Calculator) and next wave 5 is again massively extended up to 100% till now. These types of waves we generally see on occasion of very important event and are very dangerous.

Also observe that steepness is continuously increasing as the wave progress and is near to 900 at the top on even 5 minutes chart (shown by red dotted curve).  Wave (5) is again steeper than (3) here. Generally we see very sharp fall after these types of wave formations.

End of this impulsive seems near as wave (5) already extended till 100% and is already in danger zone.  After completion of this wave, if whole impulse is wave (5) or (c) shown on (Chart 2) we can expect a correction till 8000 levels from top. And if it is wave (3) shown on (Chart 2) then we can expect minimum 70 to 120 points correction from top.

Thus, correction seems near in all three cases either small or big.

Now, we need to dig deeper and see the inner wave of move 8139 closely to estimate the end of this wave.

Elliott Wave Analysis of Nifty

Chart 4

This is again 5 minute chart of Nifty showing move of last impulsive after 8139.

Here wave (iii) is extended as it projected 338% of (i) and wave (v) projected 38% till now whereas 61% and 100% projections are placed at 8359 and 8418 respectively. So, there may be the end of this wave in 8359 to 8418 range.

Conclusion:

By analyzing every probability and analyzing all higher degree, lower degree and lowest degree waves, it seems a correction from 8359 to 8418 levels. Correction may be of 70 to 120 points or till 8000. Nifty can be sold lightly at top after seeing the waves and downward reaction with stoploss. But never trade without stoploss as Nifty can go very higher if it is wave (3) started from 7986. Trading light in 8250 and 8200 put would be safer for low risk trades.

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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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