Nifty Outlook and Trading Strategy for 10 Dec 2018 Onward

| December 9, 2018

Nifty opened higher at 10644, declined to register low 10599 but bounced back by more than 100 points to register high 10704 and closed 92 points up at 10693.

Friday, Nifty was in negative zone with 10671-10722 as immediate resistance and one more decline of 130-190 points was expected without breaking higher above 10733.

Trading strategy was to sell Nifty if get in 10700-10722 range using exact stoploss of 10733 expecting 130-190 points decline in coming days. Nifty registered high 10704 and closed at 10693. Now, let’s have a fresh look at latest charts for further scenario.

This analysis report is covering move after 6825 and earlier wave counts are explained in my last “All Time Frames” analysis report Fresh Elliott Wave Analysis of Nifty on All Time Frame dated 03 Jun 2018.

Elliott wave analysis of Nifty on daily chart

Elliott wave analysis of Nifty on daily chart

This is daily time bar chart of Nifty covering bounce after low 6825 which I marked as start of wave [V] on daily chart in my last “All Time Frames” Report. There is no change in wave counts on this chart.

The last bounce from 9951-11760 looks like a 3 waves move and Nifty declined very sharply from 11760 without completing Impulse or ED Pattern. So, wave counts and personality of move is indicating the possibility of Irregular Correction at top.

So, may be inner wave ‘3’ of [v] is completed at 11171 and ‘4’ may be completed at  Irregular Correction at 10004 and wave ‘5’ may be in progress.

Minimum 38%-61% projection for wave ‘5’ is placed at 11664-12689 but earlier high is 11760. So, 11760-12689 is minimum target range for completion of wave ‘5’.

But the move and target is big, so we need to proceed step by step and need to concentrate on bounce started from 10004 to calculate internal moves.

Elliott wave analysis of Nifty on hourly chart

Elliott wave analysis of Nifty on hourly chart

This is hourly time bar chart of Nifty covering bounce after 10004 which I marked as start of inner wave ‘5’ of [v] on daily chart. Again, there is no change in wave counts.

It seems wave (1), (2) and (3) may be completed till 10941 and wave (4) may be in progress. 38% retracement of wave (3) is placed at 10586 which is short term breakeven point and Nifty almost achieved 10586.

I also calculated 61% retracement of this whole bounce (from 10004-10941) for the case if Impulse is already completed. 61% retracement is placed at 10361, so we can expect 10361 after 10586.

Now, we need to analyse the decline started from 10941 to check if corrective pattern is completed or not.

Elliott wave analysis of Nifty on 15 minutes chart

Elliott wave analysis of Nifty on 15 minutes chart

This is 15 minutes time bar chart of Nifty covering decline from 10941 which I marked as start of wave [4] on 15 minutes chart.

It is wave (1) completed from 10941-10834, wave (2) completed from 10834-10882 and wave (3) may be completed from 10882-10588 and wave (4) may be in progress.

23%-38% retracement progress of whole move till wave (3) is placed at 10671-10722, so 10671-10722 is immediate resistance and 10722 is immediate breakeven point on upside and Nifty already entered in this resistance range after registering high 10704. (I calculated 23%-38% retracement of whole move till wave (3) because wave (2) is smaller).

Nifty is expected to decline by 130-190 points (38%-61% projection for wave 5) without breaking higher above 10722.

But Nifty if breaks and stay above 10722 for 15 minutes can result in further bounce towards 10834-10941 in coming days.

Let’s have a separate look at progress of wave (4) started from 10588 on separate chart.

Elliott wave analysis of Nifty on 5 minutes chart

Elliott wave analysis of Nifty on 5 minutes chart

This is 5 minutes time bar chart of Nifty which I marked as progress of wave (4) on 15 minutes chart.

It seems wave (a or 1) completed from 10588-10655, wave (b or 2) completed from 10655-10631 as Irregular Correction and wave (c or 3) may be in progress.

38% retracement of progress of wave (c or 3) is placed at 10664, so 10664 is immediate breakeven point and Nifty if breaks below 10664 can decline further towards 10600-10588.

Conclusion

For Medium/Long Term: – There is no change in medium/long term outlook, the first Impulse from low 10004 bounced above Reflex Point 10710 which is indicating first sign of bigger reversal for new high above 11760. Now, Nifty can decline below 10004 only if the overall correction started from 11760 turns into Irregular/Complex Correction.

Wave (C) is very big, so we need to proceed step by step and must concentrate on the internal pattern of bounce started from 10004 to decide further trades.

For short term: – There is no change in short term outlook, Nifty is still in negative zone with 10722 as  upside breakeven point and there is possibility of one more decline of 130-190 points without breaking higher above 10722.

But Nifty if breaks and stay above 10722 for 15 minutes can result in further bounce towards 10834-10941 in coming days.

10664 is immediate breakeven point and Nifty if breaks and stay below 10664 for 15 minutes can decline further towards 10600-10588.

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

Trading Points of View:

There is possibility of one more decline of minimum 130-190 points and 10671-10722 is low risk selling range with stoploss above 10722. But stoploss is big, so we need to sell nearer to stoploss. I already suggested selling in 10700-10722 range on Thursday.

So, those who sold Nifty in 10700-10722 range on Friday can hold the same using exact stoploss of 10733 (some points above 10722) expecting decline of 130-190 points from high. But start booking profit or trailing stoploss after 10600. Exit the trade and wait if Stoploss of 10733 triggers.

This is low risk trading strategy I can suggest in such conditions, otherwise traders can plan their own trade based on the conditions explained above.

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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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