Nifty Outlook and Trading Strategy before Gujarat 2017 Election

| December 10, 2017

Nifty opened higher at 10198 and traded with strength for rest of the day. Nifty bounced by more than 100 points to register day’s high 10170 and finally closed 98 points up at 10265.

Friday, Nifty was in negative zone with 10198 as breakeven point and any reversal was expected if Nifty breaks above 10198 within 2-3 hours after opening. Trading Strategy was buying Nifty on correction if break above 10198 within 2-3 hours after opening using stoploss of 10159. Breakeven point 10198 was breached at opening only and Nifty bounce further to register high 10270. Let’s have a fresh look at latest charts for further scenario.

Today I am covering bounce from 28 Sep 2017 low 9687 and earlier wave counts are explained in my previous analysis report Fresh Elliott Wave Analysis of Nifty on All Time Frames as on 14 Aug 2017

Elliott wave analysis of nifty on 5 hour chart

Elliott wave analysis of nifty on 5 hour chart

This is 5 hour time bar chart of Nifty covering bounce from low 9687 which I marked as start of new upside impulse.

It seems wave (1) completed from 9786-9945, (2) completed from 9945-9881, wave (3) may be in completed from 9881-10490, wave (4) may completed at 10033 and wave (5) may be in progress.

Wave (4) retraced deeper below 38% retracement placed at 10183 which is the point of confusion. But even if it is not wave (4) then also minimum 10490 is expected on upside because the decline from 10490-10033 is corrective pattern. So, our first target is 10490 in every case and further we can calculate after reaching 10490.

Fibonacci wise, minimum 38%-100% projection for wave (5) is placed at 10339-10529 but end of wave (3) is 10490. So, 10490-10529 is the minimum target range for wave (5).

So, we need to analyze the progress of wave (5) started from 10033 on lowest possible time frame to identify its pattern and short term levels.

Elliott wave analysis of nifty on 5 minute chart

Elliott wave analysis of nifty on 5 minute chart

This is 5 minute time bar chart of Nifty covering bounce from 10033 which I am expecting as progress of wave (5) on 5 hour chart.

It seems wave (1) completed from 10033-10127, (2) completed from 10127-10101 and wave (3) may be in progress from 10101.  And within wave (3), it seems inner wave 1,2,3,4 completed till 10235 and 5 may be in progress from 10235.

Minimum 38%-61% projection for wave 5 of (3) is placed at 10295-10333 is the minimum target range for wave 5 of (3) to complete which can also extend further higher.

Normal 23%-38% retracement of wave (3) [from 10101-10260] is placed at 10222-10199. So, 10222-10199 is the range where Nifty can find further support on declined and 10199 is the breakeven point below which we can think of any reversal and same can be used as stoploss for longs.

Conclusion

Nifty bounced by more than 200 points from 10033 (20 points earlier from our support range 10013-9993) and also breached medium term breakeven point 10198 on Friday.

So, Nifty is in positive zone now for minimum upside targets 10490-10529 in coming days where as 10295-10333 is the immediate target range. 10222-10199 is the range where Nifty can find support on any declines.

10199 is the breakeven point on downside below which we can think of any reversal and same can be referred as stoploss for longs.

Trading Point of View:

Overall outlook is positive for minimum medium term target 10490-10529 and 10199 is the breakeven point. So, short/medium term trading strategy must be buying on any dips towards 10222-10199 using exact stoploss of 10171 (below 38% retracement of whole bounce from 10033-10260) for minimum target 10490-10529 in comings days.

Those who are already holding longs can use 10171 as fresh stoploss for longs.

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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"