Nifty Outlook and Trading Strategy for June 2018 Expiry Week

| June 22, 2018

Nifty opened flat at 10742 and declined to register day’s low 10710 but bounced back from lower levels and traded with strength for rest of the day. Nifty bounced by more than 120 points from day’s low to register day’s high 10837 and closed 80 points up at 10821.

Yesterday, Overall pattern was not clear but Nifty was expected to bounce towards 10809 and above without breaking below 10701 in normal conditions. There was also a possibility to register one more low below 10701 before bouncing if wave (b) started from 10782 becomes Irregular.

Trading strategy was to buy Nifty based on a particular condition expecting minimum bounce towards 10809 and above. Condition didn’t fulfil for suggested trade but Nifty bounced above 10809 without breaking below 10701. Now, let’s have a fresh look at latest charts for further scenario.

This analysis report is covering move after 9951 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 for June 2018 Expiry Week

Elliott Wave Analysis of Nifty for June 2018 Expiry Week

This is 5 Hour time bar chart of Nifty covering bounce after low 9951 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.

It seems wave (1) completed from 9951-10229, wave (2) completed from 10229-10111 as Irregular Correction and wave (3) may be completed at 10929, wave (4) may be completed at 10417 as Simple Zigzag and wave (5) may be in progress. [Wave (4) retraced deeper than 38%).

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.

Nifty can decline below 10417 only if wave (4) turns into Complex Correction (Double Zigzag or Triple Zigzag) otherwise Nifty is heading for high above 10929 again. And we can get clue of next possibility by analyzing the progress of wave (5) started from 10417.

So, let’s analyze the progress of expected wave (5) started from 10417 on lowest possible time frame chart to check its pattern closely.

Elliott Wave counts of Nifty for June 2018 Expiry Week

Elliott Wave counts of Nifty for June 2018 Expiry Week

This is 30 minute time bar chart of Nifty covering bounce from 10417 which I have marked as start of wave (5) on 5 hourly chart. Again, there is no change in wave counts on this chart.

It seems an Impulse completed from 10417-10770 as marked on chart and same Impulse can be wave [a] or [1], simple zigzag correction from 10770-10550 can be wave [b] or [2] but the further impulsive bounce from 10550-10893 can either be wave [c] or inner wave [i] or [3]. There are 03 different possibilities: –

  1. If the bounce from 10550-10893 is wave [c] then there are 02 conditions: –
    1. Wave (5) started from 10417 is progressing as Ending Diagonal Triangle and [abc] wave from 10417-10893 can be inner wave [i] of Ending Diagonal. Nifty can decline towards 10550 as wave [ii] (start of wave [c] of [i]) followed by a sharp bounce of 470 points as wave [iii] (more than wave [i]) in this case.
    2. The whole decline started from 10929 may become Complex Correction (Double Zigzag or Triple Zigzag) and Nifty needs to decline below 10417 to complete this Complex Correction. Nifty can bounce above 10929 again but after completing the correction below 10417 in this case.
  1. If the bounce from 10550-10893 is inner wave [i] of [3] then Nifty must bounce very sharply towards new life time high 11171 without breaking below 10550. And 61% retracement of same wave [i] placed at 10681 will be indicative support in this case. It is a rare case but possible.

These are most probable conditions as this point of time otherwise there can be something else which I am not able to understand yet. There are multiple possibilities, so we needs to concentrate on inner pattern of decline started from 10893 to calculate immediate/very short term moves.

Elliott Wave outlook of Nifty for June 2018 Expiry Week

Elliott Wave outlook of Nifty for June 2018 Expiry Week

This is 15 minute time bar chart of Nifty started 10893 which I am analyzing independently because I am not sure which exact wave completed at 10893.

It seems a corrective (abc) pattern completed from 10893-10701. Further, the bounce from 10701-10809 seems impulse and same can be marked as wave (a or 1), corrective (abc) decline from 10782-10710 can be wave (b or 2) and wave (c or 3) may be in progress.

Wave (c or 3) may be already completed at 10837 (with highly extended inner wave 5) or inner wave 3 may be in progress. Bounce is very sharp at the end which is making it difficult to identify exact inner waves.

Normal 100%-123% projection for wave (c or 3) is placed at 10818-10843 and Nifty already entered in this range.

And 23%-38% retracement of progress of wave (c or 3) is placed at 10807-10788. So, 10807-10788 is immediate support range and 10788 is breakeven point for downward reversal. Nifty can decline again towards 10710-10701 if breaks below 10788.

Conclusion

For long/medium term,

Same as I explained in my all time frames report, Outlook for medium/long term is still bullish because Nifty is within the middle of wave (3) on largest wave cycle and there is Irregular Correction at top. Nifty has long way to go with occasional corrections (maximum 23%-38% corrections with 9918 as breakeven point and 8968 as pattern negation point. Nifty may not break below 8968 in any case in coming years before competition of larger wave cycle.  We need to revise whole wave counts if Nifty ever broke below 8968.

For Short Term,

Nifty gave minimum bounce for 10809 and above as wave (c or 3) as expected and same wave (c or 3) already achieved normal 100%-123% projection but pattern of this wave is not clear because of sudden rise. This wave may be already completed or within its inner wave 3.

Now, 10807-10788 is immediate support range on downside and 10788 is breakeven point for downward reversal. Nifty if breaks lower below 10788 can fall further towards 10710-10701. Nifty is in positive zone as long as trading above 10788 and same can be used as stoploss for any existing longs.

We need to observe the further move, Nifty if completes convincing corrective pattern in 10807-10788 range then further bounce for higher levels can be expected otherwise breaking below 10788 can initiate further fall.

We need to keep all these conditions in mind.

Trading Points of View:

According to fresh conditions on charts: –

If someone bought Nifty today and still holding then trade can be managed with trailing stoploss of 10787 (below 10788). Minimum upside target is already achieved so we can’t calculate any further targets confidently. We can just manage the trade with trailing stoploss and 38% retracement of progress of wave (c or 3) can be used as trailing stoploss as Nifty bounce further.

Nifty if completes a convincing corrective pattern in 10807-10788 range then light longs can be initiate in 10807-10788 range using stoploss of 10787 (below 10788) expecting minimum bounce towards 10837 and above. This trade can be confirmed during market hours only after analyzing the pattern of correction and Support Range/Breakeven Point will move higher with Nifty moving higher.

Nifty if breaks below 10788 without breaking above 10837 then it can be sold in 10787-10800 range using stoploss of 10817 (30 points) expecting targets below 10710-10701.

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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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