Nifty opened gap down on Friday at 8305 and declined sharply till 8225 within first 10 minutes of trade followed by gradual recovery till 8320 before closing 72 points at 8299. I mentioned in my last report that “Wave 3 may complete somewhere below 8337 followed by corrective bounce of 23%-38% and then wave (5) downwards”. Nifty declined below 8337 till 8225 and we also seen 23%-38% recovery after that.
I also mentioned in my trading strategy that, “Trading strategy should be “Selling on Rise” only. Any 23%-38% bounce can be used for selling with stoploss some points above 38%”. So, let’s have a look on latest wave pattern for further conclusion.
This is daily time bar chart of Nifty covering move after Jan 2015 high of 8996 which I am expecting as progress of wave 4 as complex correction (may be Triple Zigzag). Read my previous analysis report Medium Term Outlook of Nifty as on 26 July 2015 for previous waves and more clarification on inner wave’s counts/structure. Some important observations are: –
- In case of Triple Zigzag, wave (X2) is not completed at 8655 as upper line joining wave (X1) and 8655 is disturbed later. May be this link wave (X2) is progressing as very Complex Corrective pattern which is difficult to identify at present.
- The wave’s structure at bottom (7940) looks like a corrective wave (may be an Irregular Correction). So, we can’t ignore the possibilities of a low below 7940 in near future.
Overall, ,may be this whole bigger correction from 8996 is progressing as very Complex Triple Zigzag correction with wave (X2) even more complex in nature. So, we must concentrate on short term waves only till we identify any clarity on whole pattern.
The point from this chart we need to keep in mind is only that, after completion this present down wave started from 8655 (either above 7940 or below 7940), Nifty needs to touch or break that upper red line again (currently around 8600) in short term.
Overall structure is very complex with many possibilities, which is very difficult to explain. So, I am avoiding going deeper to avoid confusions. In short, after completion of present down wave somewhere below 8204, Nifty may rise above 8530 followed by new low again. But, don’t take it seriously as it may confuse you and concentrate on latest short term waves only till we identify any clarity. Wave’s will show the reversals and clarity when the actual time comes.
So, let’s concentrate on move after July high 8655 only from where the current down wave has started.
This is 3o minutes time bar chart of Nifty covering move after July 2015 high 8655 which I am expecting as a start of correction after completion of Impulse.
By seeing the structure of waves, It seems wave (A or 1) completed from 8655-8321, wave (B or 2) completed from 8321 to 8621 ( there may be a Irregular correction pattern at bottom as move from 8321-8621 looks like impulsive rather than corrective). And there may be start of wave (C or 3) which broken the end of wave (A or 1) and also achieved more than 100% projection after breaking 8287.
123%, 138% and 161% projection for wave (C or 3) are placed at 8208, 8159 and 8080 respectively which may or may not be achieved. Now, close look at fall after last week high 8530 on 5 minutes chart will give us stoploss, next immediate targets and outlook of Nifty for coming sessions.
This is 5 minutes time bar chart of Nifty covering move after 17 Aug high of 8530. It seems wave (1) and (2) are completed and (3) is in progress as shown on chart. And within wave (3), it seems inner wave (iv) is completed at 8320 and (v) is in progress. Inner wave (iii) of (3) is extended and (iv) retraced between 23%-38% as we expected in last report.
Now wave (v) of 3 can project minimum 38%-61% which is placed at 8204-8132 where as further 70% and 100% are placed at 8106 and below in case of extended (v).
In short, Wave (3) need to complete somewhere below 8204, may be 8204-8106 range followed by a minimum bounce of 23%-38%. Further movement can be calculated later after we see at least 23% bounce after completion of wave (3). Stoploss for Shorts must be 8343 which is 38% retracement of wave (3) progressed till now. Try to book short term profits in shorts within 8204-8106 range.
As I mentioned in last report, “We must carry our shorts with trailing stoploss as decline till 8200 and below is also possible. Trading strategy should be “Selling on Rise” only. Any 23%-38% bounce can be used for selling with stoploss some points above 38%”.
Nifty gives 23%-38% bounce from low on Friday which was a selling opportunity with stoploss above 38% (8341). Now, current set up on charts are suggesting a minimum decline below 8204, may be in 8204-8106 range where we must book our short term shorts as minimum bounce of 23%-38% (80-150 points) is expected after completion of wave (3) below 8204. Positional traders can book 50% profit and hold rest with stoploss of 8343.
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