Nifty reversed from 7958-7900 range as we expected in Elliott Wave Analysis Report of Nifty for 12 June 2015 and bounced more than 300 points till now. As Nifty is around 8250, we need to look at medium term charts to explore further scenario. So, today I am covering medium term and short term chart in this report. Let’s start with longer time frame first.
This is daily time bar chart of Nifty covering move after 2013 low of 5118 which I am expecting as start of an impulse where waves 1, 2 and 3 are completed from 5118 to 8996 as shown on charts. Inner wave (5) of 3 is Ending Diagonal Triangle and highly extended.
There is start of wave 4 from 8996 which seems like progressing as Irregular Complex Correction. Wave 4 already achieved 23% retracement after breaking below 8273 whereas 38% is placed at 7825 which may or may not be achieved. 7940 is the low till now.
We can expect a new bull rally of about 2000 points after completion of wave 4, may be somewhere around 7825 which can be identified only when wave 4 is near to its completion. Let’s have separate look on progress of wave 4.
This is daily time bar chart of Nifty which I am expecting as start of wave 4. The structure of wave is not suggesting it as an impulse or Simple Zigzag but is a progress of a Complex Correction (may be Triple Zigzag) most probably.
Triple Zigzag is always confusing and difficult to identify in advance. It can be identify only when it completes the pattern. So we need to concentrate on its inner waves till we see the signs of its completion.
By seeing the structure, this complex correction seems somewhere within wave (X2) whereas last (ABC) cycle is still pending. Or it may complete as Double Zigzag only.
Nifty needs to touch that upper line of Triangle (show as red upper line on chart) to complete wave (X2) if it as progress of Triple Zigzag. So, first we can expect a touch or break of that red upper line which is around 8350 as of now and further move can be identified after a touch of upper line by seeing latest wave pattern.
Now, we need to see the bounce from last low 7940 to explore short term Nifty move.
This is 5 minutes time bar chart of Nifty showing move after Friday’s low 7940. It seems wave (1) completed from 7940-8034, wave (2) is completed from 8034-7952 as Irregular Correction and (3) is in progress or already completed at 8250.
We can see minor decline after completion of wave 3 as wave 4, may be 23%-38% of wave 3 followed by start of wave 5 which can show higher levels again. Wave 4 rarely retraces more than 38% so stop loss for existing/positional longs should be a fraction below 38% which is placed at 8136.
By analyzing all the charts, Nifty has possibilities to show minimum levels around 8350 and stop loss for any existing/positional longs must be 8136. Short term trend is still up and “Buy on Dips” would be best trading strategy in coming sessions or till 8350. Selling must be avoided and any dip can be used to buy with stop loss.
Nifty can decline for new low below 7940 again after achieving higher levels but the actual situation can be analyzed only if Nifty touch or breaks above upper line shown on second chart. Keep reading my daily Elliott wave analysis reports of Nifty for latest updates.