Nifty opened gap up at 8007 and declined sharply to register day’s low 7976 but bounced from lower levels and traded with huge strength for rest of the day. Nifty bounced more than 150 points before closing 148 points up at 8114.
Friday, I didn’t suggest any traded but suggested to book profits/exit in all shorts and a sharp bounce above 8020 was expected. Nifty bounced sharply above 8020 and bounced further to register day’s high 8122.
Today I am covering decline from 10 Nov 2016 high 8598 to conclude short term movement as pattern of previous waves are not completely clear.
This is 30 minutes chart of Nifty covering decline from 10 Nov 2016 high 8598.
It seems waves 1, 2, 3, and 4 are completed till 8210 and (5) is in Progress from 8210. Wave (4) is Irregular Correction. Minimum 38%-61% projection for wave (5) is placed at 8030-7919 which is already achieved but there is no sign that pattern for wave (5) (Impulse or ED) is completed. So, next 100% projection is placed at 7739.
8210, start of wave (5) of last impulse is Reflex Point in this case. So, any big reversal can be seen only if an impulsive move completes above 8210. And bounce towards 8210 must be faster for reversal because wave (5) is already extended which is known to retrace sharply by 100%. So, any consolidation below 8210 will support the decline towards 7916-7739 again. Bounce from 7916 is already getting slower and warning cautions for more decline.
38%-61% retracement of this whole decline from 8598-7916 is placed at 8176-8337.
As Nifty is already spending time below 8210, we need to analyze the pattern of bounce from low 7916 to conclude further movement.
This is 5 minutes time bar chart of Nifty covering bounce from 21 Nov 2016 low 7916.
By looking at the pattern of whole bounce, first bounce from 7916-8055 may be wave (a or 1), decline from 8055-7952 may be wave (b or 2) as simple zigzag and wave (c or 3) may be in progress from 7952.
Wave (a or 1) must be impulse or Leading Diagonal as wave (b or 2) is simple zigzag but I am not able to counts this expected (a or 1) as impulse or Leading Diagonal. On that other hand, I am not able to identify any other pattern for this whole bounce from 7916-8122.
Fibonacci Calculation wise, Wave (c or 3) projected exactly 123% which is normal projection for wave (c) and next 161% projection is placed at 8176.
So by looking casually at pattern and by observing Fibonacci projection, the whole pattern of bounce looks like (abc) and still warning the decline below 7916. 8055 (end of wave (1 or a) is the point below which we can be confident about decline below 7916 again and Nifty needs to trade above 8055 only to give any big reversal.
There is no conclusion for medium term as pattern doesn’t seem completed at bottom and there is no reversal pattern formed as of now, general trend is still negative. Casually, 8210 is the point above which we can think of any medium term reversal as of now. And Nifty needs to complete impulsive bounce above 8210 to show the signs of any reversal, otherwise any consolidation below 8210 may initiate fresh decline towards 7916-7739.
For Intraday or very short term, the general structure of bounce from 7916 is still supporting corrective pattern and there are still cautions for a decline below 7916. And 8055 is break even points between below which we can expect decline below 7916 again. And on upside, 8176-8210 is the range for cautions where we can witness some break or further decline.
For Trading Point of View:
The down wave started from 8598 achieved its minimum projections but pattern doesn’t seem completed and there is no reversal pattern formed at bottom as of now. So, we need to wait for a fresh pattern to form to initiate any fresh positional trade.
For Intraday or very short term,
Nifty if even touch 8055 then shorts can be initiated systematically with stoploss of 8097 expecting minimum targets as 7952 which further can extend towards 7916. Short must be taken systematically with risk management as waves are bigger and stoploss is 40-50 points.
On upside, If Nifty bounce near 8200-8210 range then again shorts can be taken with stoploss of 8231 expecting same targets 7952-7916.
If someone likes to buy and holding longs then 8055 can be used as stoploss for longs.
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