Nifty Outlook and Trading Strategy for 31 May 2018 Expiry Day

| May 31, 2018

Nifty opened lower at 10579 and declined further to register day’s low 10558 but bounced back from lower levels by about 90 points to register day’s high 10548 and finally closed 18 points down at 10614. Overall, it was a volatile day with both side swings.

Yesterday, 10646-10603 was support at downside and 10603 was breakeven point but pattern of last wave was indicating minimum decline towards 10594-10576 and 10645 was stoploss for shorts.

Trading strategy was to sell Nifty if get in 10625-10645 using stoploss of 10646 expecting 10594-10576 but targets were achieved at opening only, so trade was negated. Let’s have a fresh look at latest charts for further scenario.

Today I am covering decline for May 2018 high 10929 and previous wave counts are explained in my earlier analysis report Further Elliott Wave Analysis Updates of Nifty for 22 May 2018 Onward

Elliott Wave Counts of Nifty on 5 Hourly Chart

Elliott Wave Counts of Nifty on 5 Hourly Chart

This is 5 Hour time bar chart of Nifty covering bounce after low 9951 which I am analyzing independently. This is the same chart with explanation which I had explained in my last analysis report because there is no major 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 at 10929.

38% retracement of wave (C or 3) was already broken after breaking below 10616. So, I calculate 38%-61% retracement of whole bounce (from 9950-10929) for reference. 38%-61% retracement of this whole bounce is placed at 10555-10324 where Nifty registered low 10417.

And if it is wave (3) completed at 10929, wave (4) completed from 10929-10417 as Simple Zigzag Correction (abc) then minimum 38%-61% projection for wave (5) is placed at 10790-11021 but end of wave (3) is 10929. So, 10929-11021 is minimum target range on upside in this case.

Let’s analyze the decline started from 10929 on lowest possible time frame chart to check its pattern closely.

Elliott Wave Counts of Nifty on 15 Minute Chart

Elliott Wave Counts of Nifty on 15 Minute Chart

This is 30 minute time Bar chart of Nifty covering declined from latest high 10929 which I am expecting as completion of wave (C or 3). This is again the same chart with explanation which I had explained in my last analysis report because there is no major change in wave counts on this chart.

It seems wave (a) completed from 10929-10699, wave (b) completed from 10699-10789 which retraced just 38% and wave (c) may be in completed from 10789-10417. I am marking this decline as wave (a), (b) and (c) because wave are overlapped after breaks above 10699 and this move can’t be (1), (2) and (3).

The decline from 10929-10417 is corrective in nature, so next upside wave started from 10417 needs to complete somewhere above 10929 (above the start of this corrective pattern). Nifty can decline below 10417 only if the decline started from 10929 turns into Complex Correction (Double Zigzag or Triple Zigzag).

So, let’s have a separate look at the pattern of bounce started from 10417 on lowest time frame chart to check its pattern and to calculate immediate moves.

Elliott Wave Counts of Nifty on 15 Minute Chart

Elliott Wave Counts of Nifty on 15 Minute Chart

This is again 15 minute time bar chart of Nifty covering bounce from 10417.

It seems wave [a or 1] completed from 10417-10469, wave [b or 2] may be completed from 10469-10419 and wave [c or 3] may be completed at 10717.

Wave [c or 3] already retraced more than 38% after breaking below 10603 and breakeven point is already broken.

And within decline from 10717, it seems wave (a or 1), (b or 2) and (c or 3) is completed till 10558 but the bounce after 10558 also looks corrective.

So let’s have a separate look at bounce started from 10558 on lowest possible time frame chart to check its pattern deeper.

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 bounce after today’s low 10558.

The bounce looks like a combination of repeated (abc) waves and carrying the personality of complex correction.

It seems a Triple Zigzag correction (abc-x1-abc-x2-abc) in progress with where (abc-x1-abc-x2) is already completed and last and third (abc) cycle may be in progress. Last (abc) cycle needs to complete somewhere above 10648.

Nifty can decline sharply towards 10558 after achieving 10648 if this pattern is really a Triple Zigzag Correction.

Conclusion

For long term, Nifty is still in 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, the overall pattern is not completely clear but breakeven point 10603 is broken and the pattern of bounce from today’s low 10558 looks like a progress of Triple Zigzag Correction which needs to complete above 10648 and is indicating a sharp decline below 10558 after completion.

So, Nifty seems negative for coming sessions having resistance in 10648-10667 range indicating sharp decline towards 10558 again.

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

Trading Points of View:

The pattern of very last upside wave started from 10558 looks like a progress of Triple Zigzag Correction indicating sharp decline towards 10558 after achieving 10648.

So, Nifty if breaks above 10648 at morning then 10650 Put of Tomorrow Expiry can be bought for Intraday without any stoploss and hold till end of the day or till 10558.

But if Nifty beaks above 10648 near closing then light short or June Puts can be taken above 10648 with stoploss of 30 points expecting targets below 10558 in coming days. Take position according to your risk tolerance only.

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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