Nifty opened huge gap down at 7788 but bounced sharply a fraction after registering low of 7771 and traded with strength for rest of the day. Nifty bounced more than 150 points from low to register day’s high of 7937 before closing 39 points down at 7915.
I expected a decline till 7863-7791 followed by a sharp bounce of 140-250. But Nifty opened below 7791 and Wave (5) went highly extended which projected more than 100% till 7771 but we witnessed a sharp bounce of 150 points as expected. Let’s see what is there on latest charts.
Today I am covering wave counts from last week high 8336 and read my previous report Most Probable Elliott Wave Counts of Nifty as on 02 Nov 2015 for previous wave counts.
This is 30 minutes time bar chart of Nifty covering move after Oct 2015 high 8336. It seems a downward impulse is completed from 8337-7771 with highly extended wave (5). Wave (5) which started from 8116 projected more than 100% and went highly extended.
Extended wave (5) often reverse 100% with same speed, thus possibilities are there for a sharp bounce till 8080-8116.
On the other hand, 38%-61% retracement of this whole impulse is placed at 7986-8120 which are the expected levels we can see on upside if I am right at identifying pattern. The bounce of 140-250 points I expected was roughly based on 38%-61% retracement only.
This decline from 8836-7771 can also be ‘ABC’ as explained on chart. Please read the comments on chart. In this case also Nifty needs to bounce above 8336 in near term. If this decline is really ‘ABC’ then it can be wave (2) of Ending Diagonal Triangle.
Let’s have a look at bounce from today’s low 7771.
This is 5 minutes time bar chart of Nifty covering bounce after today’s low 7771. It seems an impulse is completed from 7771-7874 but the next bounce from 7841-7937 took almost double time but is still below 100% projection of previous impulse (from 7771-7874). Please see the move marked within gray boxes carefully. So, 2nd bounce from 7841-7937 may not be wave (3) as wave (3) generally is steeper and faster than wave (1).
So, there arises the possibility of “Irregular Correction” as I shown on chart. The bounce from 7841-7937 may be wave (B) of Irregular Correction and wave (C) downwards is pending which can complete below the start of wave (B), 7841 followed by start of wave (3) upwards. Wave (C) can complete above 7841 also but normally we see wave (C) of Irregular Correction completes below the end of (A).
If this is really an “Irregular Correction” pattern then we can expect a decline below 7841, may be till 7841-7806 range followed by a bounce above 7937 again. Nifty should not break below 7771 to keep this pattern intact.
Know about Elliott Wave Theory Analysis:
- Elliott Wave Theory Explained with Examples – Wave’s Cycle
- Concept of Elliott Wave Theory Explained – Personalities of Waves
- Triple Zigzag Correction of Elliott Wave Theory Explained by Deepak Kumar
- Why You Must Learn Elliott Wave Analysis from Deepak Kumar
Nifty has shown minimum bounce of 140 points from low which we expected. Now, pattern is suggesting a decline till 7841-7806 followed by a bounce above 7937 again, most probably we can see a bounce till 7980-8120.
So, light buying can be initiated if we see levels of 7841-7806 using stoploss of 7770 expecting targets of 7980-8120 in coming sessions. Trade light as stoploss is big and market is closed on 11 and 12 Nov 2015 or it is safe to go with hedge trade.
Safe Hedge Trading Strategy:
It is safe to trade hedge against the risk of two continuous holidays. So, one can buy 8100 Nifty Nov Call and Sell 8200 Nov Call in equal quantity if Nifty trade below 7841. You will get the difference of about 8-10 points which will the maximum risk and maximum profit we can get 80-90 points. One can also trade in big quantity as per there risk tolerance and capacity as Maximum loss will be 8-10 points only. Exit 8100 Call long if Nifty break below 7771 and hold 8200 Call Short with stoploss of 2 points, it will result in just 4-6 point’ loss if stoploss hits.
For small trades, Low Risk entry levels, small Stoploss and best trading opportunity can be identified only during live market hour after seeing latest wave patterns on 5 minute chart. It is difficult to calculate exact entry levels in advance in present market conditions. Those you learned and understood Elliott Wave Theory can make better use of these market conditions for intraday swing trades during live market hours.
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