Elliott Wave Analysis Report of Nifty for 06 Oct 2016

Nifty opened gap up at 8806 but decline sharply after opening and traded with weakness for rest of the day. Nifty decline more than 70 points from high to register day’s low 8731 before closing 25 points down at 8743.

Yesterday, 8822-8875 was expected on higher side and stoploss for all longs was 8738. Nifty opened above 8806 but decline without achieving minimum 8822 and also trailing stoploss of 8838 for rest 50% longs was triggered. Let’s have a fresh look at latest chart to prepare further trading plan.

Today I am covering the move after 2016 high 8968 only as there is some confusion in the pattern of previous waves which further making it difficult to identify short term moves. We will ignore previous waves for time being and will focus on very short term pattern only.

Nifty Elliott Wave Analysis for 05 Oct 2016
Nifty Elliott Wave Analysis for 05 Oct 2016

This is 30 minutes time bar chart of Nifty covering decline from 8968. This is the same chart with explanation which I explained in my yesterday report as there is no major change in wave counts on this chart.

The first decline from 9868-8688 may be wave (A) but inner waves are not convincing. Further bounce from 8688-8893 may be wave (B) as Double Zigzag Correction as explained in previous reports and further wave (C) may be completed at 8555. Wave (C) projected 100%-123.

Now, wave (5) of (C) started from 8800 is highly extended (projected more than 123%) which already retraced by 100% after breaking above 8800.

On the other hand, if this correction started from 8968 is already completed at 8555 as Simple Zigzag then this new impulse started from 8555 needs to break above 8968. Otherwise, Nifty can decline below 8555 only if this correction started from 8968 turn into Complex Correction (Double Zigzag or Triple Zigzag).

Let’s analyze the bounce from 30 Sep 2016 low 8555 to prepare further trading plan: –

Nifty Elliott Wave Analysis for 06 Oct 2016
Nifty Elliott Wave Analysis for 06 Oct 2016

This is 5 minute time bar chart of Nifty covering bounce after 30 Sep 2016 low 8555.

The bounce started from 8555 seems impulsive with inner wave (1) completed from 8555-8617, (2) completed from 8617-8565 as Simple Zigzag, (3) completed from 8565-8777 but wave (4) may be completed at 8731 or still in progress as complex type of Irregular Correction (may be Double Irregular).

Yesterday, we were expecting that wave (4) already completed at 8738 as Irregular Correction because pattern seemed completed but Nifty declined back below 8738 again without achieving 3minimum 8% projection for wave (5), 8822. Wave (5) doesn’t achieved minimum 38% projection indicates that wave (5) is not started yet and wave (4) is still in progress as Complex type of Irregular Correction. And there is no other pattern I can identify on chart.

23%-38% retracement of wave (3) is placed at 8727-8696 so 8696 is the point below which we can think of any reversal. And minimum 38%-61% projection for wave (5) (calculated from 8731) is placed at 8816-8869. So, wave (5) needs to touch 8816 to meet its minimum requirement whereas wave (5) will be extended after 8869.

Conclusion:

Nifty achieved our expected target 8800 but declined back below 8738 without achieving minimum 8822 which further indicated that the impulse is not completed yet. So, may be wave (5) is still pending which needs to complete above 8806 whereas minimum 38% projection calculated from 8731 is placed at 8816.

38% retracement of wave (3) is placed at 8696 which is the point below which we can think of any reversal and 8869 on higher side is the points above which we need to be cautious of very sharp decline.

For Trading Point of View:

Trading strategy must be to “Buy on Dips” as long as Nifty is trading above 8696 and unless Nifty achieves 8816 (38% projection of wave 5 calculated from 8731 which will reduce if wave (4) completes below 8731 again). But exact entry levels and small stoploss cannot be calculated at present wave positions.

Stoploss of 8695 is big from present levels, so buy only if Nifty decline towards 8720-8696 range OR if you see any small patterns suggesting small stoploss. Try to book maximum profits in 8716-8869 range.

Trade in limited quantity and with strict stoploss to avoid heavy loss if we prove wrong in analysis.

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