Nifty Outlook and Trading Strategies for 18 May 2018 Onward

| May 17, 2018

Nifty opened higher at 10775, registered high 10777 but failed to sustain at those levels and traded with negative bias for rest of the day. Nifty declined by more than 110 points from high to register day’s low 10664 and finally closed 58 points down at 10682.

Yesterday, there was possibility one more decline for 10699 and below with 10764-10789 as immediate resistance on upside and 10789 as pattern negation point.

Trading strategy was Selling Nifty if get in 10764-10789 range using exact stoploss of 10790 expecting minimum decline of 60-90 points from day’s high.  Nifty opened in resistance range and decline by 110 points without triggering stoploss. Now, let’s have a fresh look at latest charts for further scenario.

Today I am covering decline after all time high 11171 and earlier wave counts are explained in my last All Time Frames analysis report Nifty is Still Bullish for Medium and Long Term – Fresh EW Analysis on All Time Frames

Elliott wave counts of nifty on daily chart

Elliott wave counts of nifty on daily chart

This is daily time bar chart of Nifty covering decline from all time high 11171 which I had marked as end of inner wave (b) of {iv of 3 of [v] of [3] of (iii) of (3)} on larger time frame. This is the same chart with explanation which I posted in my last analysis report because there is no major change in wave counts on this chart.

It seems an impulse completed from 11171-9951. If this impulse is really wave (c) of Irregular correction then next impulse started from 9951 needs to complete above 11171 but if I am wrong at identifying and this impulse is wave (a) or (1) then 61% retraced of this impulse is already achieved after breaking above 10704.

There is bit confusion in overall pattern, so we need to concentrate on progress of bounce started from 9951 to calculate immediate further moves.

Elliott wave counts of nifty on hourly chart

Elliott wave counts of nifty on hourly chart

This is 1 Hour time bar chart of Nifty covering bounce after low 9951 which I am analyzing independently. Again, I am not able to conclude any confident pattern within this move because of steep rise without any reasonable correction but whatever I could understand I tried to explain on this chart.

It seems wave (A or 1) completed from 9951-10229, wave (B or 2) completed from 10229-10111 as Irregular Correction and wave (C or 3) may be completed at 10929.

It is difficult to identify inner waves of (C or 3), but 23%-38% retracement of progress of wave (C or 3) is placed at 10735-10616. So, 10735-10616 is fresh short term support on downside and 10616 is breakeven point below which we can think of any bigger reversal. Nifty already entered in support range and registered low 10664.

Long awaited 23%-38% correction has been happened and now we need to wait for formation of a clear corrective or impulsive pattern to calculate next move confidently. Till then, we need to analyze the decline started from 10929 to check its pattern and to calculate immediate moves:-

Elliott wave counts of nifty on 5 minute chart

Elliott wave counts of nifty on 5 minute chart

This is 5 minute time Bar chart of Nifty covering declined from latest high 10929 which I am expecting as completion of wave (c or 3).

This decline seems impulsive with inner wave (1), (2), (3), (4) already completed and (5) may be progress from 10789. Wave (5) already achieved minimum 38% projection and next 61%-100% projection is placed at 10646-10559. 100% projection for wave (5) is a rare case.

Within wave (5), it seems inner wave (i), (ii), (iii), (iv) is already completed and wave (v) nay be in progress from 10725. Wave (v) achieved 61% projection placed at 10667 and next 100% projection is placed at 10632 which may or may not be achieved.

(Note: End of wave (i) is 10725.05, and end of wave (iv) is 10725. So, wave (iv) didn’t overlap (i) and saved by 0.05 points).

Within wave (v), it seems inner wave 1, 2, 3 is already completed and wave 4 or 5 may be in progress.

Overall, this impulse started from 10929 can complete somewhere in 10646-10600 followed by bounce towards 10789.

Conclusion

For long term, Nifty is still bullish and has long way to go as explained in my last “All Time Frames” report but we are not sure if bottom is already made or still pending. Nifty can bounce from present levels also and Maximum estimated bottom range is 9800-9600 based on Fibonacci retracements.

For short term, Nifty is still in bullish zone with 10735-10616 as support range on downside and any big reversal can be expected after breaking below 10616 only. Nifty entered in support range and achieved 10664 but we need to wait for a clear corrective or impulsive pattern to calculate next confident move. Decline towards 10616-10601 is good low risk buying opportunity.

For intraday/immediate move, the decline started from 10929 seems impulse which is expected to complete somewhere in 10646-10600 range and we can expected minimum bounce towards 10789 (or 38%-61% retracement of this impulse) after completion of this impulse.

We need to keep all these conditions in mind while planning next trade.

Trading Points of View:

  1. The shorts initiated today in 10764-10789 range achieved targets of 60-90 points so must have been booked. If someone still holding can book full profit and wait for next trading opportunity.
  1. Same as I suggested yesterday, Nifty if declined further and get in 10616-10601 range then 10800 Call of May Expiry can be bought without any stoploss to hold till further updates.

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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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