Nifty opened Gap down today and declined sharply till mid-session to touch the low of 8273 as I expected in yesterday’s report. After giving low of 8273 Nifty bounced 74 points to touch the high of 8347 followed by a sharp decline again in end session and finally closed 63 points down at 8292. Overall it was a volatile day with repeated up-down swings. Let see what charts are saying.

Elliott Wave Analysis of Nifty
Elliott Wave Analysis of Nifty

This is 5 minutes time bar chart of Nifty showing move after high of 8626. This chart shows that wave (3) of ‘A’ completed at today’s low 8273 and corrective up move for wave (4) of ‘A’ is in progress and  last down wave (5) of ‘A’ is pending.

Generally, we see wave (4) correcting 23%-38% of wave 3. Here wave (4) of ‘A’ corrected exactly 23% of (3) in (abc) pattern but personality and structure of waves is creating doubts and forcing me to feel that wave (4) is not yet completed and may go above today’s high again. Let me show you today’s move closely to explain why I am feeling so.

Elliott Wave Analysis of Nifty
Elliott Wave Analysis of Nifty

This is again 5 minutes time bar chart of Nifty showing move of last 2 sessions.  I we look at the move after low 8273 which I am assuming the start of wave (4) of ‘A’, the upside move from 8273 to 8347 can be identified as “abc” and also corrected wave (3) exactly till 23% (shown in previous chart).

But, last down move after 8347 is also faster which is not normal for wave (5). If we take this down move from 8347 to 8277 as wave 1, 2 and 3 of (5) [shown as (a), (b) and (c) on chart] then it is going to be faster and aggressive seeing faster wave 1 and 3.

So, I am assuming this last fall from 8347-8277 as wave “abc” and there may be a formation of “3-3-5 Flat Correction” or “Complex Correction” that can take Nifty above 8347 again to complete wave (4) and start wave (5) towards new low again. 38% retracement for wave 4 placed at 8392 which is normal and 50% placed at 8430 which is also possible but rare case. Exact levels we can calculate and predict only during market hours seeing live waves.

Note: If l am wrong at identifying and last fall from 8347 till 8277 is wave 1, 2 and 3 of (5) rather than waves “abc” (I am expecting) then Nifty can fall sharply till 8250 and below without bounce.

Learning Lesson:

Today I posted chart on my Facebook time during live market hours suggesting Buy Nifty. Let me show you the chart:

Nifty 12

This is 5 minutes time bar chart of Nifty I posted on my Facebook timeline today during live market hours. Let me explain why I suggested to buy Nifty with day’s low as stop loss when Nifty was around 8290 spot.

I expected Nifty to show 8273 in my yesterday’s report and this level of 8273 was for minimum 38% extension of wave (v) of 3. I looked at the chart after Nifty touched minimum extension wave (v) and identified five waves within (v) of 3 (Wave 5 or (v) always have five inner waves).  See the chart above

Means wave (v) downwards started from 8376 achieved its minimum extension of 38% at 8273 and also identified as clear impulse (five wave’s move). These conditions were suggesting that wave (v) of 3 completed at low and wave 4 started that can go till 23%-38% of 3. So, I waited for some bounce for confirmation. When I saw Nifty bounced above 8300 after low of 8273, I was ready to buy Nifty on dip till 8290-8280 with Stop loss of day’s low 8273.

I bought when Nifty took a dip around 8290. I was expecting 40-60 points target because minimum 23% for wave 4 was placed at 8347 after taking its start from 8273. Wave 3 was from 8587 to 8273 and its 23% retracement was at 8347 and Nifty achieved the same.

In this way, using the combination of wave’s cycles, wave’s calculations and wave’s personalities you can take low risk entries with small stop loss and with confidence. Please read “Personalities and Calculation of Waves” chapter if you are not able to understand this explanation.