Nifty Trading Strategies for Feb 2019 Expiry Week

| February 24, 2019

Nifty opened bit lower at 10782 and traded in narrow range of 40 points between 10758-10801 for rest of the day. Finally, Nifty closed flat at 10791 after a dull range bound day.

Yesterday, Nifty was in short/Medium term negative zone with possibility of decline towards 10534-10333 in coming days. 10810 was still the overall upside breakeven point whereas 10746 was downside breakeven point.

Trading strategy was to hold Nifty shorts taken 10790-10810 range using same stoploss of 10831 or sell fresh after break below 10746. Nifty faced resistance at 10810 in last 02 sessions and traded in 10758-10801 range on Friday. Now, let’s have a 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.

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. There is no change in wave counts on this chart.

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.

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. There is no change in wave counts. Again, there is no change in wave counts on this chart.

From high 10985, the downside Impulse completed from 10985-10534 can be marked as wave (A). Irregular wave (B) may be completed from 10534-11118 with inner wave [a] from 10534-10923, [b] may be completed at 10923-10583, [c] from 10583-11118 and wave (C) may be in progress from 11118.

Wave (C) started from 11118 must be Impulse. Normal 100%-123% projection for wave (C) is placed at 10667-10560 and Nifty already entered in this range, so wave (C) already achieved minimum projections.

Normally, wave (C) of Irregular correction completed near the after the end of wave (A). End of wave (A) is 10534, so we can expect wave (C) to complete near 10534 or below.

If we assume the bounce from 10004-10985 as impulse then its inner wave (v) is extended and start of extended wave (v) is 10333. Extended wave (v) often retraces 100%, so we can expect fall towards 10333.

After combining all the conditions and personality of move on this chart, wave (C) achieved its minimum projection but other conditions are indicating the possibility of fall towards 10534-10333.

So, our next step is to analyze the progress of wave (C) separately on lowest time frame chart to check if an Impulse pattern is completed or not.

This is 30 minutes time bar chart of Nifty covering decline after 11118 which I marked as start of wave (C) of Irregular Correction on 5 hourly charts.

The decline from 11118-10620 is almost straight without even 38% correction in between. So, I can assume that wave (iii) is completed at 10620 and wave (iv) may be in progress as Irregular Correction.

38% retracement of this whole move till wave (iii) is placed at 10810. So, 10810 is still the upside breakeven point and we can think of any upside reversal after break above 10810 only.

So, wave (iv) can complete somewhere below or near 10810 followed by one more decline for low below 10585 as wave (v). Nifty already registered high 10808.

Note: There is Irregular Correction at bottom, so the possibility of decline below 10585 will still be there even if Nifty trades above breakeven 10810, although next resistance cannot be calculated at this point of time.

Wave (iv) looks like an Irregular Correction (5-3-5) with inner wave (a) completed from 10610-10759, irregular (b) completed from 10759-10585 and wave (c) may be in progress.

Wave (c) of Irregular correction is always impulse (5 waves move) and normally completes near or after the end of wave (a). End of wave (a) is 10759 and wave (c) is already trading above 10759 but pattern looks like a 3 waves till now.

Within wave (c), it seems wave [a or 1] completed from 10585-10696, wave

[b or 2]

may be completed from 10696-10647 and wave [c or 3] may be completed at 10808 or still in progress. Wave [c or 3] already achieved normal 100%-123% projection.

23%-38% retracement of wave [c or 3] is placed at 10770-10746. So, 10770-10746 is immediate support and 10746 is immediate downside breakeven point and Nifty if breaks below 10746 can result in further fall towards 10647-10585.

Conclusion

For Medium/Long Term: – There is no change in medium/long term outlook, most of the conditions are favouring formation of Irregular Correction on top and indicating sharp fall towards 10534-10333 in coming days and Nifty already registered low 10585. But trading must be done based on internal patterns only.

For short term: – Nifty is still in negative zone and there is possibility of further decline towards 10585-10534. 10810 is still the upside breakeven points but Nifty already registered high 10808 whereas pattern [wave (c) of Irregular Correction] doesn’t seems completed yet, so Nifty may break this breakeven point.

But there is formation of clear Irregular Correction at bottom [wave (v)], so the possibility for one more decline below 10585 will be there even if Nifty breaks 10810.

10770-10746 is immediate support and 10746 is immediate downside breakeven point. Nifty if breaks below 10746 can result in further fall towards 10647-10585.

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

Trading Points of View:

There is no change in Trading Strategy because wave counts and outlook has not been changed.

Short/medium trading strategy must be “Selling on Rise” whenever getting opportunity expecting decline towards 10534-10333 in coming days. 10831 (20 points above 10810) can still be used as stoploss for any positional shorts but buying is not recommended even if stoploss triggers.

So, those who sold Nifty in 10790-10810 range can use same 10831 as stoploss for short. Exit the trade and wait for next opportunity if stoploss triggers but avoid any buying because possibility for decline below 10585 will still be there.

Any fresh selling can be planned after break below 10746 only but entry levels and stoploss can be calculated after seeing the pattern after breakdown only.

I am not comfortable in any Intraday/Positional Buying yet. But those who want to buy by their own then 10770-10746 is low risk buying range and 10746 (some points below 10746) is stoploss.

These are low risk trading strategies I can suggest in such conditions in advance, otherwise traders 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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