Outlook and Trading Strategy of Nifty for 16 Mar 2018 Onward

| March 16, 2018

Nifty opened almost flat at 10405 and bounced further to register day’s high 10420 but failed to sustain at higher levels and decline by more than 70 points to register day’s low 10346 and finally closed 50 points down at 10360.

Yesterday, I expected an Ending Diagonal Triangle in progress and 10440 was the point from where we can get clue of next move, but a decline below 10141 or bounce above 10631 was expected soon. 10389 was immediate breakeven point below which further decline towards 10336-10223 was expected.

Short term trading strategy was Selling on Rise with stoploss whenever getting opportunity. And I suggested holding hedge trade taken on Monday/Tuesday by buying 10600 Call and 10300 Put in equal quantity till further update. Let’s have a fresh look at latest charts for further scenario.

This analysis report is covering bounce from low 6825 and earlier wave counts are explained in my last “All time Frame” report Elliott Wave Analysis Update of Nifty on All Time Frames as on 22 Jan 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 from 6825 which I am expecting as start of wave {[v] of [3] of (iii)} of larger (3) on monthly chart. This is the same chart with explanation which I had explained in my last analysis report because there is no change in wave counts on this chart.

It seems inner wave 1 of [v] completed from 6825-8968, 2 completed at 7893 and wave 3 may be in progress.

And within wave 3 started from 7893, there is small but identifiable correction from 10137-9687, so 10137 can be inner wave (iii) of 3 followed by (abc) correction from 10137-9687. But the later bounce from 9687-11171 is also 3 waves move followed by sharp decline. So, there are 02 possibilities: –

  1. Either wave (iv) of 3 completed at 9687 and wave (v) in progress
  2. Or wave (iv) is still in progress as Irregular Correction with wave (A) completed from 10137-9687, Irregular (B) completed from 9687-11171 and wave (C) in progress from 11171.

This chart is showing two possibilities, so need concentrate on decline from 11171 to calculate further move until we get clarity on daily chart.

Elliott wave counts of Nifty on hourly Chart

Elliott wave counts of Nifty on hourly Chart

This is hourly time bar chart of Nifty covering decline from all time high 11171 which is the start of downward impulse. 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 (1) completed at 10979, (2) completed at 11117, (3) completed at 10276, (4) completed at 10637 and wave (5) may be in progress.

Minimum 38%-61% projection for wave (5) is placed at 10295-10083 whereas Nifty achieved 10141 till now. Wave (5) already achieved its minimum Fibonacci projection, now we need to analyze the pattern of wave (5) on separate chart.

Elliott wave counts of Nifty on hourly Chart

Elliott wave counts of Nifty on hourly Chart

This is again hourly time bar chart of Nifty covering bounce from 10276 which I had marked as start of wave (5). Again, there is no change in expected wave counts yet.

This decline after 10637 has overlapping with repeated (abc) pattern, so there is possibility of Ending Diagonal Pattern for wave (5).

The first (abc) decline from 10637-10302 can be inner wave (i) of Ending Diagonal, next (abc) bounce from 10302-10631 can be wave (ii) of ED, wave (iii) may be completed from 10631-10141 and wave (iv) may be in progress.

Generally, wave (iv) of ED retraces wave (iii) by about 61% which is placed at 10443 and we also observed that wave (iv) of ED completes near the start of inner wave (c) of (iii) which is at 10440. So, we can expect wave (iv) of ED to complete near 10440 if wave (iii) already completed at 10141. Maximum limit for wave (iv) is 10631 [start of wave (iii)]. Nifty achieved 10478 till now.

Let’s analyze the bounce started 10141 on separate chart to get further hint.

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 bounce from 10141 which can be progress of wave (iv) of ED. Again, there is no major change in wave counts on this chart.

There is overlapping at start followed by sharp rise within this bounce. Casually it seems a corrective pattern with repeated (abc) waves, may be Double Zigzag Correction or formation of Triple Zigzag Correction or it may be some other pattern which I am not able to identify yet. Double Zigzag Correction (abc-X1-abc) is already completed.

Further, there is impulsive decline from 10478-10336 which can be marked as wave (a or 1), further bounce from 10336-10420 can be marked as wave (b or 2) and wave (c or 3) may be in progress from 10420. Normal 100%-123% projection for wave (c or 3) is placed at 10278-10244.

End of wave (b or 2), 10420 can be assumed as short term breakeven point on upside and same can be used as stoploss for any shorts.

Conclusion

Again, there is no change in wave counts and outlook, Nifty is still within a very complex type of pattern at bottom and there is possibility of Ending Diagonal Pattern at the bottom started from 10637. So, we can expect some confusing and unexpected moves in coming days if it is really Ending Diagonal Triangle in progress. Ending Triangle Pattern can be confirmed only after completion of its inner wave (iv) or (v). Nifty is already giving volatile moves now days.

Expected ED may be within wave (iv) which is expected to complete near 10440 and maximum limit or the same is 10631. So, Nifty needs to decline again below 10141 [to complete wave (v)] without breaking above 10631 [end of wave (ii)] to fulfill the conditions for Ending Diagonal Pattern. Exact range for completion of wave (iv) can’t be calculated because pattern of wave (iv) is not clear yet.

For very short term, Nifty has possibility to decline towards 10278-10244 range and 10420 is immediate breakeven point on upside and same 10420 can be used as stoploss for shorts.

Trading Points of View:

According to the conditions on charts:-

Hedged trade taken by buying 10600 Call and 10300 Put in equal Quantity near 10440 can be hold till further updates. We can expect either 10141 or 10631 soon. Fresh trade can also be initiated if get Nifty near 10440. Trade may have activated at combined premium of 105-110 points which is around 100 at today’s closing.

Nifty if get in 10400-10420 range then 10500 Put of Mar expiry can be bought using stoploss of 10421 expecting targets 10278-10244.

There are cautions for a good decline for low below 10141 in coming days, so general trading strategy would be Selling or Rise with stoploss whenever getting opportunity. And Nifty if goes as I expected and declined below 10141 without breaking above 10631 then there will be good buying opportunity for short/medium term.

BANK NIFTY ANALYSIS

“Elliott Wave Analysis Reports of Bank Nifty” with “Bank Nifty Weekly Options Trading Strategies” Daily is also provided by one of my personally trained student Vinod Sharma on his website http://www.ewanalyst.com/ Links to some of his analysis Reports are: –

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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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