Nifty opened gap down today at 8115 but bounced sharply and traded with huge strength for rest of the day. Nifty bounced more than 130 points from day’s low 8107 to register day’s high 8244 before closing 68 points up at 8238.
In Yesterday’s report, I expected a bounce till 8210-8257 with very immediate stoploss of 8134 and advised to look at fresh pattern if Nifty open or break below 8134. Nifty opened below 8134 and then bounced till 8210-8257 range. There was a good trading opportunity when Nifty broke above 8135 after opening gap down which I explained later in this report. Let’s have a fresh look at latest charts for further scenario.
Today I am showing move only after 24 May 2016 low 7715 as previous waves are not completely clear and possibilities I have explained in my previous analysis report Elliott Wave Analysis Report of Nifty for 26 May 2016.
This is 30 minutes time bar chart of Nifty covering move from 24 May low 7715 which looks like sharp impulsive wave.
May be inner wave (3) complete at 8294 as there is not even a 23% correction in between the whole move started from 7715-8294 as shown on chart. If wave (3) completed at 8294 then normal 23%-38% retracement for wave (4) is placed at 8157-8074 which is already achieved.
Now wave (4) also seems completed at 8063 which retraced slightly more than 38% as Simple zigzag and (5) may be in progress. Minimum 38%-61% projection for wave (5) is placed at 8284-8420 which Nifty needs to achieve in coming sessions.
So, Nifty can achieve minimum 8294 (top of wave 3) in coming session which can further extend to 8420. This possibility will be negated only if wave (4) turned into complex correction otherwise wave (4) has already completed an ‘abc’ cycle and achieved 38% retracement. This pattern is valid till Nifty is trading above 8063.
So, we need to analyze bounce from 8063 to conclude further Nifty movement and to prepare any trading strategy.
This is 5 minute’s time bar chart of Nifty covering move for 13 Jun 2016 low 8063 which I am expecting as start of wave 5. Earlier we were expecting a possibility of Ending Diagonal Triangle pattern for wave 5 which is gaining the personality and structure now. So, wave (5) started from 8063 looks like a progress of Ending Diagonal Triangle Pattern with,
Wave (1) of ED completed from 8063-8213 as (abc), (2) completed from 8213-8074 as Simple Zigzag and (3) in progress from 8074.
Now if this big wave 5 is really going to be Ending Diagonal then its inner wave (3) started from 8074 should not break above 161% projection 8316 as wave (3) of ED can never be extended wave. And next wave (4) need to decline below the brown dotted line joining 8074-8107, can go normally till 8107 (start of ‘c’ of 3) but can never break below 8074 (start of wave 3).
Please read the detailed explanation of Ending Diagonal Triangle pattern at Ending Diagonal Triangle (ED) Pattern of Elliott Wave Theory Explained by Deepak Kumar
Other Possibility: If Nifty break above 8316 straight way from here then the pattern may become, Wave (1) completed from 8063-8134 followed by a very big “Irregular Correction” from 8134-8074 as wave (2) with inner wave (a) from 8134-8069, very big Irregular (b) from 8069-8213 and wave (c) from 8213-8074. And wave (3) started from 8074 which can go much higher.
There are possibilities for Ending Diagonal Triangle Pattern in progress from 8063. If it is really an ED in progress then Nifty can first decline near 8140-8110 without breaking above 8316. And after decline, Nifty can bounce above new high again without breaking below 8074. Breaking above 8316 will negate these possibilities.
So, the short term strategy would be to sell on rise with stoploss 8317 expecting target near 8140-8110. And then buy again near 8140-8110 with stoploss 8074 expecting target above 8294. 8317 must be the strict stoploss as breaking above 8316 will negate ED pattern.
There will be good shorting opportunity (buying puts) for 250-400 points fall if this wave started from 8063 completes as Ending Diagonal Triangle. So, wait for the perfect time to buy puts if conditions favors.
Good Trading Opportunity on 20 June 2016, Yesterday:
This note is especially for learners to explain how trading decisions can be made based of Elliott Wave Counts. There was a good “low risk high reward” trading opportunity on 20 Jun 2016, yesterday when Nifty opened huge gap down followed by break above 8135. It was a trading opportunity for minimum 90-120 points with stoploss of 30 points.
All the conditions and confirmation of trades are explained on chart given below, please read carefully. And try to understand that many perfect trading decision like this can be made during market hours only especially when market is volatile and there is no way to decide this type of trade in advance as opening of market is not in our control. That’s is the reason I always insist everyone to learn yourself so that you can make real use of Elliott Wave Theory and my analysis reports.
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