Nifty corrected by more than 33% of its life time move in just 2 months and pattern on long term charts has been changed. So, it is the time of revise wave counts on all time frames again to get idea of further outlook and road map Nifty.
We prepared last all time frame analysis report of Nifty in June 2018 and link to that analysis report is Fresh Elliott Wave Analysis of Nifty on All Time Frame dated 03 Jun 2018. Now, we are analyzing all time frames again and let’s start Elliott Wave Analysis of Nifty with Monthly chart.
This is monthly time bar chart of Nifty covering its life time of move.
It seems major wave (1) completed from 775-6357, wave (2) may be completed from 6357-2252, wave (3) may be completed from 2252-12430 and major wave (4) or (5) may be in progress.
Pattern of wave (3) is not convincing but it is corrected almost by 38% so I am assuming wave (3) completed at 12430 based on its 38% retracement.
23%-38% retracement of wave (3) is placed at 10027-8542 whereas Nifty registered low 8555 and bounced to close at 9955.
Minimum 38%-61% projection for wave (5) is placed at 13307-16057 if wave (4) is already completed at 8555.
So Long Term outlook is bullish as long as Nifty is trading above major downside breakeven point 8542 and bounce towards 13307-16057 is possible before bigger crash. Risk of major recession will be there if Nifty closes below 8542 for 2-3 sessions.
Now, let’s have a separate look at progress of major wave (4) started from 12430 to check its pattern.
This is hourly time bar chart of Nifty covering decline after all time high 12430 which I marked as start of major wave (4) on monthly chart. The decline is very sharp with huge gap opening which is making it difficult to count inner waves.
It seems wave (a or 1) completed from 12430-12087, wave (b or 2) may be completed from 12087-12246 as big Irregular Correction and wave (c or 3) may be completed at 8555. I am marking decline from 12246-8555 as wave (c or 3) because of its personality [sharp with gaps) otherwise it is difficult to identify its inner waves.
23%-38% retracement of wave (c or 3) is placed at 9426-9964 and same is already broken but Nifty didn’t closed above 9964. The downside wave started from 12430 is big, so we need to wait for close above 9964 to confirm breakout.
61% retracement of this whole decline is placed at 10949 in case the decline from 12430-8555 is impulse.
9426-9964 is still short term resistance and 9964 is short term upside breakeven point. Nifty is in short term negative zone as long as trading below 9964. Staying and closed above 9964 can result in further bounce towards 10949-12246-12430.
9964-9426 would be short term support after close above 9964. Nifty will have possibility to decline below 8555 again unless it closes above 9964.
Now, we need to analyze the bounce started from low 8555 separately on lowest possible time frame to calculate further levels.
This is 05 minutes time bar chart of Nifty covering bounce started from low 8555 which I am analyzing independently.
The bounce seems impulsive with inner wave (1), (2), (3), (4) may be completed till 9370 and wave (5) may be in progress. Wave (5) achieved 61% projection after break above 10106 and is already a extended wave. Next 100% projection is placed at 10562 which is a rare case.
Within wave (5), it seems (i), (ii), (iii), (iv) may be completed till 9734 and wave (v) may be in progress. Wave (iv) retraced deeper than 38% but didn’t overlap (i)
38% projection for wave (v) falls below earlier high 10159 and next 61%-100% projection is placed at 10221-10523. So, 10159-10221 is minimum target range for completion of wave (v) but break above 10523 is a rare case.
23%-38% retracement of wave (iii) is placed at 9991-9888 and same is already broken. Break below 9888 was indicating decline towards 9451-9370 but Nifty decline till 9734 and bounce back above 9991 again.
Now, 9991-9988 is still immediate support and 9888 is immediate downside breakeven point. Nifty is in positive zone as long as trading above 9888 and has possibility to bounce towards 10221-10523.
But break and stay below 9888 for more than 15 minutes can result in further decline towards 9451-9370.
Nifty corrected by more than 33% in last 2 months whereas Friday was most volatile day in Nifty history with lower circuit followed by 15% recovery. These are rare market conditions and we still need to wait for stability in market. India VIX is at 50 which mean fear in market is still there. I am suggesting the levels and outlook based on wave counts but still there is hesitation and low confidence in levels when market is extremely volatile.
For Long Term, outlook is bullish as long as Nifty is trading above major downside breakeven point 8542 and bounce towards 13307-16057 is possible before any bigger crash. Risk of major recession will be there if Nifty closes below 8542 for 2-3 sessions.
For short/medium term, 9426-9964 is short term resistance and 9964 is short term upside breakeven point. Nifty is in short term negative zone as long as trading below 9964. Staying and closing above 9964 can result in further bounce towards 10949-12246-12430.
9964-9426 would be short term support after closing above 9964. But possibility for decline below 8555 will be there unless Nifty closes above 9964.
Very Short term/Intraday, 9991-9888 is immediate support and 9888 is immediate downside breakeven point. Nifty is in positive zone as long as trading above 9888 and can bounce towards 10221-10523.
But Nifty if break and stay below 9888 for more than 15 minutes can result in further decline towards 9451-9370. 9888-9991 can act as immediate resistance after staying below 9888 for more than 15 minutes.
On upside, 10523-10562 is immediate/intraday resistance. Nifty can decline towards 9734-9370 before breaking higher above 10562. We need to check pattern again if Nifty breaks straightway above 10562.
We need to keep all these conditions in mind while deciding next trade.
Friday was most volatile session of Nifty history and market is still not stable yet. Our levels and trading strategies are based on normal conditions which we prepared after long back testing but there is hesitation and low confidence if these levels work in such rare market conditions because there is no way to back test strategies for these type of rare market events.
Personally we are not trading with stoploss and we are doing only hedged option trades in minimum possible quantity. We personally like to trade safe and avoiding trades in such condition. We are suggesting most probable low risk trading strategies to give ideas, traders who want to take risk or can manage trades can use these levels and conditions to plan their own trade.
Positional, Nifty if stay above 9964 continuously for couple of hour then positional trading strategy would be “Buying on Dips” with stoploss some points below 9426 for upside targets 10949-12246-12430 in coming days. 9964-9426 will be low risk buying range after fulfilling of condition.
For Intraday, (needs to exit Intraday no matter if in loss or profit)
Further, we will update about the formation of any important internal pattern or any change in trend/pattern/important levels or fresh support/resistance/breakeven point during market hours by WhatsApp Broadcast to all my “Nifty Live Updates” subscribers.