Nifty Outlook Based on Elliott Wave Analysis for 13 Aug 2018 Onward

| August 11, 2018

Nifty opened almost flat at 11474, registered high 11478 but declined sharply just after opening and traded with negative bias for rest of the day. Nifty declined by about 50 points to register day’s low 11419 and closed 41 points down at 11429.

Yesterday, Nifty was expected to bounce sharply towards 11550-11555 if breaks above 11486, otherwise 11273-11136 was medium term support and 11136 was breakeven point on downside.

Trading strategy was to wait for correction to decide further trade. Otherwise, intraday buying was suggested after break above 11486 using stoploss of 11463 expecting 11550-11555 as minimum target. But Nifty failed to break above 11486 and declined till 11419, so trade was not activated. 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 counts of Nifty for 13 Aug 2018

Elliott wave counts of Nifty for 13 Aug 2018

This is daily 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 9951-10929, (2) may be completed from 10929-10417 and wave (3) may be in progress from 10417.

And within wave (3), it seems inner wave (i) of (3) completed from 10417-10893 (pattern not clear), (ii) completed at 10557 as Double Zigzag correction and wave (iii) may be completed at 11495 or still in progress.

23%-38% retracement of progress of wave (iii) is placed at 11273-11136. So, 11273-11136 is still fresh medium term support and 11136 is medium term breakeven point. Any bigger reversal can be expected after break below 11136 only.

Within wave (iii), it seems inner wave [1], [2], [3], [4] is completed and [5] may be in progress from 10925. Wave [5] of (iii) already achieved 100% projection placed at 11446 and registered high 11495, wave [5] is already highly extended.

Now, we need to analyze the progress of wave [5] of (iii) on separate chart to check its pattern.

Elliott wave counts of Nifty for 13 Aug 2018

Elliott wave counts of Nifty for 13 Aug 2018

This is 30 minute time bar chart of Nifty covering bounce from 10925 which I marked as start of wave [5] of (iii) on 5 hourly chart.

Inner wave [i] may be completed from 10925-11076 (pattern is not clear), wave [ii] may be completed from 11076-10935 and wave [iii] may be completed from 10935-11390, wave [iv] may be completed from 11390-11234 as simple zigzag and wave [v] may be completed at 11495 or still in progress.

Wave [v] already achieved minimum 38% projection after breaking above 11411 and next 61% projection is placed at 11521 which may or may not be achieved. Nifty achieved 11495 till now.

Within wave [v], it seems inner wave 1, 2, 3, 4 is completed and 5 may be in progress. Wave 5 also achieved its minimum 61% projection. Pattern of wave 5 is not clear so we are not confirmed if it is completed or still in progress.

But end of inner wave ‘i’ or 5 can be assumed as pattern negation point and we can assume wave 5 of [v] of [5] of (iii) completed if Nifty breaks below 11412.

Now, let’s have a closer look at decline started from all time high 11495 to see if there is any sign of reversal.

Elliott wave counts of Nifty for 13 Aug 2018

Elliott wave counts of Nifty for 13 Aug 2018

This is 5 minutes time bar chart of Nifty covering decline from all time high 11495 which I am expecting as a start of small or big correction.

It seems wave (a or 1) may be completed from 11495-11465, wave (b or 2) may be completed from 11465-11490 as Irregular Correction and wave (c or 3) may be in progress.

Within wave (c or 3), it seems inner wave (i), (ii) is completed and wave (iii) may be completed at 11419 or still in progress.

38% retracement of progress of wave (c or 3) is placed at 11446. So, 11446 is immediate resistance and breakeven point on upside and Nifty if trades above 11446 for 15 minutes can result in further bounce towards new all time high.

But this breakeven point 11446 will change with Nifty falling lower below 11419. Fresh breakeven point will be 38% retracement of the decline from 11490 to fresh low [progress of wave (c or 3)]. 

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,

There is no change in outlook, Nifty achieved minimum target 11478 and entered in 11478-11553 range after registering new life time high 11495. Waves achieved all their minimum projection, so a small or big correction is expected very soon before any further rise.

11273-11136 is fresh medium term support and 11136 is breakeven point. Any bigger reversal can be expected after break below 11136 only. The possibility of decline towards this support range is also there.

For intraday/very short term, 11146 is immediate resistance and breakeven point on upside. Nifty if trades above 11446 for 15 can result in further bounce towards new all time high, otherwise one more decline of 30-50 points [minimum 38%-61% projection for wave (v) of (c or 3)] can be there.

Start of correction towards support 11273-11136 can be confirmed only if the decline started from 11495 completes as an impulse (wave (a) of correction).

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

Trading Points of View:

According to fresh conditions on charts: –

Overall, Nifty is in very bullish zone because inner wave (iii) of (3) is in progress on daily chart. So, our main strategy must be “Buying on Corrections” in support range. We can think of selling Nifty only after identifying any confident bearish/reversal pattern on smaller time frame.

  1. So, Nifty if complete a corrective pattern around support range 11273-11136, then it will be a good buying opportunity for bounce above 11495. But support range 11273-11136 is big, so we can plan low risk trade after seeing the pattern of decline towards is range only. We can just wait right now.
  1. On the other side, possibility of a decline towards support 11273-11136 is there but we need to wait for completion of downward Impulse (started from 11495) followed by upside correction to sell with low risk. The downward impulse will be wave (a), upside correction will be wave (b) and we can trade for fast and sharp wave (c) downside.

Otherwise, small intraday/swing trades can be done for 40-50 points move but it is not safe to decide small trades a day in advance. Trades for small moves can be planned during market hours only with small stoploss because it needs continuous watch.

For general idea, 11446 is immediate resistance/breakeven point on upside and there is possibility of one more decline of 30-50 points. And Nifty if trades above 11446 for 15 minutes can bounce further for new all time high. I can’t suggest any confident trade for this condition because minimum target for the trade is just 30-50 points, we don’t have exact stoploss and the breakeven point 11446 will change if Nifty moves below 11419, even any 30 point gap opening can complete/negate an ongoing pattern. Experienced traders can plan these swing trades during market hour based on their own experience.

These are low risk and most probable trading conditions I can suggest at this point of time. Otherwise trades can plan their own trades 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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