Nifty opened Gap Up today and bounced till 8428 within a fraction of opening and traded with volatility in negative bias for rest of the day before closing just 6 points up at 8355 after registering low of 8341. Nifty also gave 3-4 sharp swings of about 50 points both sides.
We were expecting a bounce from lows (small or big). Nifty shown bounce of 23% but didn’t give the chance to buy as it opened Gap up and was 80 points up within seconds after opening. There after Nifty broke below opening price and traded with volatility in negative bias.
In some of my previous reports I mentioned repeatedly that conditions are not confident for positional longs and we can see a decline below 7940 or 38%-61% correction of total move from 7940 to high before further upside. Read Long Term and Short Term Elliott Wave Analysis of Nifty as on 10 Aug 2015. So, today I am taking a fresh look on move after 2015 low 7940.
This is hourly chart of Nifty covering move after 2015 low 7940. There is no change in this chart and it seems an impulse completed from 7940 to 8655 as shown on chart and also explained in many of my previous analysis reports. Please read the counts on charts carefully.x
Completion of this impulse we identified earlier but main focus is on the correction after 8655. Nifty declined till 8321 after 8655 followed by rise till 8621 and then decline again. So, the pattern may be a (ABC) correction or waves 1, 2 and progress of 3 of an impulse. Chances of (ABC) correction are more till now as if wave (C or 3) competes somewhere in 8321-8208 range and bounced till 8321 again then wave 4 will overlap wave 2 which is not possible within impulse. 100% projection for wave (C or 3) is placed at 8287 and 123% is placed at 8208 which is near 61% retracement of whole move from 7940-8655.
We were expecting at least 38%-61% correction of this impulse. 38% corrective is already achieved after breaking 8380 where as 61% is placed at 8213 which may or may not be achieved. There is also an unfilled gap between 8180-8195 which is near 61% retracement.
So, we should not be overconfident about major decline from here seeing the scenario as if this pattern is ABC then we can see high well above 8655 again.
Now, we need to have a fresh look on decline after Aug 2015 high 8621 to see progress of this impulse.
This is 5 minutes time bar chart of Nifty covering move after recent high 8621. The move from top seems impulsive and by seeing the personality of decline, it seems this impulse is somewhere within last wave (5). May be inner wave (3) completed at 8383 followed by irregular correction as wave 4.
Sharp rise of 90 points from 8338 to 8428 in just 20 minutes may be inner (c) of irregular Correction. So, there may be wave (4) which completed at 8428 followed by start of wave 4.
Wave (3) is highly extended so we can usually see 38%-61% projection wave (5). 38% projection for wave (5) is placed at 8336 whereas 61% is placed at 8280 and 100% is placed at 8189 (in case of extended 5th wave).
If the sharp bounce of 90 points from 8338 -8328 as I explained above is wave (c) then we can see lower levels of 8285 and below without breaking above 8428. We need to see waves again if break above 8428.
Today’s closing pattern is suggesting a Gap Up opening tomorrow, may be above 8380 but we can’t say if this gap up sustains or not. Let me show you some patterns on 5 minutes chart.
This is 5 minutes time bar chart of nifty covering Intraday move of 13 Aug 2015. Today closing is suggesting a gap up but it can be analyzed tomorrow after opening if this bounce sustain or not. Nifty bounced from 8341 to 8382 followed by exactly 61% decline as adjusted closing. This type of closing pattern often results in Gap or up sharp rise. 61% projection of bounce is placed at 8381 where as 100% and 123% 8396 and 8405.
We can see sharp bounces within bear trend. These types of sharp bounces within negative trend are often inner wave (c) of Irregular Correction. All EWT learners are to note this pattern as it can help in taking right/low risk trading decisions.
By seeing the structure of chart at bottom, Nifty may decline below 8321 or 8285 without breaking above 8428 as explained above. We need to see latest waves again if Nifty managed to break above 8428. Nifty can open Gap Up tomorrows but can’t say if it sustain after Gap up opening or not. There is no condition for any positional trade yet.
Stoploss for buyers must be 8355 and then 8381 if Nifty breaks above 8413. Indicative stoploss for shorts seems 8429 as of now and exact stoploss can be calculated tomorrow after opening. If Nifty opened Gap Up tomorrow but traded below opening price till first 20 minutes, then there may be weakness for the day.
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