Nifty Outlook and Trading Strategy for 28 Jan 2019

| January 28, 2019

Nifty opened bit higher at 10859 and bounced sharply within fraction after opening to register day’s high 10931 but failed to sustain at higher levels and declined back by more than 170 points to register day’s low 10756 and closed 69 points down at 10780.

Friday, Nifty was in neutral zone with 10853 as upside breakeven and 10841 as downside breakeven point. 10944-10987 was upside range after break above 10853 and 10798-10750 was downside range after break below 10841.

I didn’t suggest any exact trade because it needed confirmation during market hours. Nifty traded with huge volatility and wild up-down swing within expected range. Now, let’s have 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 counts of nifty on daily chart

Elliott wave counts 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.

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.

Point of Cautions: – The reversal after completion of Irregular Correction is known to be sharp but the bounce after 10004 is slower when compared to the speed of wave (c) of Irregular Correction. So, we need to be cautious for one more low below 10004.

Now, let’s analyse the bounce started from 10004 separately to calculate internal moves.

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 bounce after 10004 which I marked as start of inner wave ‘5’ of [v] on daily chart.

It seems a (ABC) wave completed from 10004-10985 with wave (A) completed from 10004-10645, wave (B) completed from 10645-10333 as Irregular Correction, and wave (C) may be completed from 10333-10985. Wave (C) achieved 100% projection.

From high 10985, the Impulse completed from 10985-10534 can be marked as wave (A or 1). Further upside impulse from 10534-10923 can be marked as wave [A or 1].

The bounce from 10628-10987 looks like 3 waves move and waves are also overlapped. This 3 waves move with overlapping is indicating the possibility of Irregular Correction with inner wave (A) completed from 10923-10628, Irregular (B) completed from 10628-10987 and wave (C) may be in progress.

Wave (C) of irregular correction normally completes at or after the end of wave (A). So, we can expect wave (C) to complete somewhere around 10628.

Now, let’s analyse the progress of wave (C) on lowest possible time frame.

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 decline after 10987 which I am marking as start of wave (C) on 5 hourly chart.

Wave (A or 1) may be completed from 10987-10798, wave (B or 2) may be completed from 10798-10931 and wave (C or 3) may be in progress. Normal 100%-123% projection for wave (C or 3) is placed at 10742-10697.

23%-38% retracement of progress of wave (C or 3) is placed at 10797-10822. So 10797-10822 is immediate resistance and 10822 is upside breakeven point. Nifty if breaks and stay above 10822 for 15 minutes can bounce further towards 10931-10987.

Conclusion

For Medium/Long Term: – There is no change in medium term outlook, Nifty is at a point where either a fall towards 10628-10534 or a big and sharp bounce toward 11700 is expected. Most of the conditions are indicating fall towards 10628 and Nifty needs to bounce extra ordinary fast to move higher.

For short term: – Nifty is in negative zone with 10797-10822 as immediate resistance and 10822 as upside breakeven point.  There is possibility of further decline towards 10742-10697 which can extend further towards 10628.

But Nifty if breaks and stay above 10822 for 15 minutes can bounce towards 10931-10987 again.

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

Trading Points of View:

According to the conditions on charts: –

Small risk can be taken to sell Nifty if get in 10810-10822 range (near breakeven point) using exact stoploss of 10841 expecting decline towards 10742-10697. Trade in light quantity and with strict stoploss because bounce can be sharp and big if I am wrong at identifying the pattern.

Nifty if breaks and stay above 10822 for 15 minutes can bounce towards 10931-10987 but entry levels and stoploss can be calculated after seeing the pattern of breakout only.

These are low risk trading strategies I can suggest in such conditions, otherwise traders can plan their own trade based on the conditions explained above.

Identifying trading opportunity during live market hours: –

Nifty gave wild swing on Friday and some clients asked, “how to catch this type of sharp move and why we failed to identify this move in advance”.

It is simple to understand that you need to understand Elliott Wave Theory to catch not only this but any type of move. You can’t analyse the market like me without understanding EWT. And clients who subscribed for my book need to read it and then implement it. Everything whatever I know and whatever I am doing everyday is explained in this book, you just need to be committed to read and practice it, there is no other way.

And about predicting the Friday like sharp fall in advance, we can predict the move but we can’t predict the time. We had conditions that Nifty if breaks above 10853 can bounce towards 10944 and this is only which we can predict in advance. Later bounce or decline could be calculated after seeing the pattern of bounce only.

So, let me explained how we could catch the fall by seeing the pattern of bounce. Please look at 5 minutes chart below. We were expecting wave [a or 1] completed from 10798-10857, wave [b or 2] completed from 10857-10802 and wave [c or 3] in progress. Now, let’s see what happened next.

Elliott wave counts of nifty on 5 minute chart

Elliott wave counts of nifty on 5 minute chart

We were expecting wave [c or 3] started from 10802 and it registered high 10931 on Friday after opening. 38% retracement of wave [c or 3] after registering high 10931 was 10881 and same was breakeven point.

So, Nifty when broke and traded below 10881 for 15 minutes confirmed wave [c] completed at 10931 rather than [3].  And wave [c] completed at 10931 indicated fall below 10798 again (till the start of [abc] correction).

So, Nifty could be sold after breaking and staying below 10881 for 15 minutes expecting fall towards 10798. Entry could be taken near 10881 and stoploss could be 30-33 points from entry range ( I always place stoploss of 30-33 points in Nifty).

So, we can’t predict the fall like Friday in advance but we can identify it when it actually starts. And there is nothing new I explained here, this is same which I do daily in my analysis reports. The chapter “Importance of 38% retracement” and “Alternate Wave Counts” of my book is all about it.

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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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