Nifty Outlook and Trading Strategy for 27 April 2018 Onward

| April 26, 2018

Nifty opened bit higher at 10586 and consolidated in 10559-10595 range for most of the day but bounced sharply in last 45 minutes of the session to register day’s high 10628 and finally closed 47 points up at 10617.

Yesterday, short term outlook was bullish with 10480-10409 as short term support range and I expected a possibility of Ending Diagonal pattern at top indicating one more bounce above 10638 without breaking below 10509.

Trading strategy was to buy Nifty if get in 10529-10509 range using exact stoploss of 10507. Nifty bounced without breaking below 10509 but without touching our entry range 10529-10509. 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 5 hourly chart

Elliott wave counts of Nifty on 5 hourly chart

This is 5 hourly 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 had explained in my last analysis report because there is no change in wave counts on this chart.

It seems wave (1) completed at 10979, (2) completed at 11117, (3) completed at 10276, (4) completed at 10637 and wave (5) may be completed at 9951 or still in progress.

Wave 5 achieved 61%-100% projection and already a highly extended wave but its pattern is not clear. So, we can’t say confidently if wave 5 completed or still in progress. If wave 5 is already completed then 38%-61% retracement of this whole impulse (from 11171-9951) is placed at 10417-10704. Nifty achieved 10594 till now.

Now, we are not confident if downward impulse already completed at 9951 or still in progress. 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, there is no change in wave counts 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 from 10111-10594 or still in progress.

Within wave (C or 3), it seems inner wave (iii) completed at 10519, (iv) completed at 10396 and (v) may be in progress. Wave (v) already achieved minimum 38% projection after breaking above 10551 and next 61% projection is placed at 10648 which may or may not be achieved. Or it may be some other pattern in progress.

There is small correction from 10594 to 10509 and pattern of later bounce after 10509 is not completed yet. So we must calculate retracement with respect to 10594.

So, 23%-38% retracement of progress of wave (C or 3) is placed at 10480-10409 (calculated with respect to 10594). So, 10480-10409 is still short term support on downside and 10409 is breakeven point below which we can expect further decline.

There are indications of Ending Diagonal Triangle (ED) started from 10509. So, let’s have a separate look at this pattern on lowest possible time frame chart: –

Elliott wave counts of Nifty on 15 minute chart

Elliott wave counts of Nifty on 15 minute chart

This is 15 minute time Bar chart of Nifty covering bounce from 10509 which looks like a progress of Ending Diagonal Triangle pattern.

Yesterday, I was expecting the formation of Ending Diagonal Pattern (3-3-3-3-3) from 10509 and today’s move is supporting the same.

Now, it seems an Ending Diagonal Triangle pattern in progress from 10509 with inner wave [1] completed from 10509-10638 as (abc), wave [2] completed from 10638-10536 as Double Zigzag Correction and wave [3] may be in progress 10536 as (abc). Within wave [3], inner wave (a), (b) is completed and (c) may be in progress.

Normal 100%-123% projection for wave [3] is placed at 10666-10696 which is normal range for completion of wave [3]. Next 161% projection for wave [3] is placed at 10746 and this wave should not break above 10746 (because wave 3 of ED can never be extended wave).

So overall, if we are right at identifying the pattern then wave [3] of ED can complete somewhere in 10666-10696 range but not above 10746, next wave [4] can complete somewhere around 10550-10536 {near inner wave (c) of [3]} but should not break below 10536 (end of wave [2]) and next [5] complete above end of wave [3]. Imaginary scenario I had explained on chart using imaginary blue lines.

Conclusion

There is no major change in overall Long Term and Short Term Outlook: –

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, 10480-10409 is overall short support range on downside with 10409 as short term breakeven point. We can think of any bigger reversal after breaking below 10409 only.

For immediate move, there is possibility of Ending Diagonal Triangle pattern [ED] started from 10509. And probable move can be: –

  1. Nifty can first bounce towards 10666-10696 and maximum till 10746 but should not break above 10746
  2. Then Nifty can decline back towards 10585-10559 after achieving 10666-10696 range without breaking above 10746, but the decline should not break below 10536.
  3. Then Nifty can bounce again above previous high without breaking below 10536

This is the probable road map of Nifty for coming days if I am right at identifying the possibility of Ending Diagonal Pattern. Any change in wave counts or pattern negation will be explained in next report.

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

Trading Points of View:

For very short term, Nifty if bounce towards 10666-10696 then light strategic shorts can be initiated in this range using exact stoploss of 10747 (just above 10746) expecting targets 10585-10559 on downside. Initiate shorts strategically because stoploss is big or trade in options.

And if Nifty really declines towards 10585-10559 after achieving 10666-10696 then longs can be initiate in this range using exact stoploss of 10535 (below 10536) expecting minimum target above earlier high.

Important Note for Learner:  – There are two complex patterns on chart which every learner needs to observe as it can be prove as good live and practical experience.

  1. Double Zigzag pattern as wave [2] of ED from 10638-10536. Double Zigzag have (abc-X-abc) formation we identified this possibility yesterday.
  1. There is possibility of Ending Diagonal Triangle pattern started from 10509 which is within its inner wave [3]. This pattern have (3-3-3-3-3) or (abc-abc-abc-abc-abc) formation. And it will be good live and practical experience if this pattern completes as I am expecting.

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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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