Elliott Wave Outlook of Nifty Towards Sep 2016 Expiry

Nifty opened gap up at 8748 and bounced sharply to register day’s high 8768 but failed to sustain at higher levels and traded with negative bias for rest of the day. Nifty declined more than 70 points from day’s high and closed 16 points down at 8706.

Yesterday, I expected a bounce of 40-65 points followed by decline for new low 8688 and suggested to sell Nifty if get in 8760-8779 range with exact stoploss of 8783 for minimum target 8688 which further can extend towards 8613. Nifty bounced till 8768 followed by decline till 8690. Let’s have a further look at latest charts for further scenario.

Today I am covering the move after 2016 high 8968 only as there is some confusion in the pattern of previous waves which further making it difficult to identify short term moves. We will ignore previous waves for time being and will focus on very short term pattern only.

Nifty Elliott wave counts for sep 2016 expiry
Nifty Elliott wave counts for sep 2016 expiry

This is 15 minutes time bar chart of Nifty covering decline from 8968. I am not showing any wave counts of the decline from 8968-8688 but just tried to explain that the pattern doesn’t looks completed at 8688 convincingly. This is the same chart with explanation which I explained in my last report because there is no major change in wave counts on this chart.

The very last decline from 8746-8688 has not met minimum requirements of wave (5) as this decline is not projected even 38% with respect to any previous wave.  Minimum 38% comes at 8680 even we take start of (1) at lowest high 8870. So, it will be the points of confusion for some time and we can’t ignore the possibility of a decline below 8688 because of this confusion.

Further if we look at the bounce from 8688 then there is repeated overlapping of waves indicating a Double Zigzag correction (abc-x-abc). And if this bounce from 8688-8893 really completed as Double Zigzag correction then Nifty have possibility to break below the start of this Double Zigzag correction (8688).

And if we calculate projections then 61%-100% projection of previous decline (8968-8688) is placed at 8719-8613. 8719 is before previous low 8688 so possible range for downside is 8688-8613. Overall, the whole pattern after yearly high 8968 is indicating further decline below 8688. And Nifty achieved 8690 till now.

So, let’s have a separate look at decline from 23 Sep 2016 high 8885.

Nifty Elliott wave counts for sep 2016 expiry
Nifty Elliott wave counts for sep 2016 expiry

This is 5 minutes time bar chart of Nifty covering decline from 23 Sep 2016 high 8885.

The decline from 8885 looks like progress of Impulsive wave which is within its inner wave (4) or (5) and (3) may be completed at 8715.

  1. If wave (4) completed at 8768 then wave (5) achieved its minimum 38% projection but pattern doesn’t seems completed as it is 3 waves only and next 61% projection is placed at 8662.
  1. If wave (4) is still in progress as Irregular Correction then Nifty can bounce once again towards 8768-8789 followed by decline below 8688.

So, any bounce towards 8768-8779 can again be sold for decline below 8688 unless the 8688 is achieved. Possibility of Irregular Correction will be negated if Nifty achieves 8688. And Selling must be avoided above 8779 and below 8688.


Finally Nifty declined towards 8688 again which we are expecting from the day when Nifty bounced from 8688 towards 8840 without meeting minimum 38% requirement at the bottom as explained in my yesterday’s report and same was explaining in my previous reports. But the pattern formed was complex (Double Zigzag) confused to catch inner waves and perfect entry but we were always aware of the possibility for decline towards 8688.

Now for short term, overall conditions are favoring a decline below 8688 once again, may be till 8688-8613 and same 8779 is the point above which we can think of any reversal. So, stoploss for any fresh shorts must be above 8779 (for fresh shorts only if get bounce before achieving 8688).

Nifty will achieve minimum requirements of the whole pattern if decline below 8688 so any fresh Selling must be avoided after Nifty achieves 8688. And safe entry for buying comes around 8613 which is 100% projection explained on first chart. So, wait for identification of a perfect pattern or decline towards 8613 to initiate buy.

For trading point of view,

For short term or Intraday, any bounce towards 8768-8779 can be sold using stoploss of 8783 (4-5 points above 8779) expecting targets below 8688. Sell on bounce only towards entry range to maintain risk reward. Avoid selling if Nifty trades higher above 8779.

Avoid further selling once Nifty achieve 8688 and wait for the identification of small pattern for buying with small stoploss. Calculation wise, the safe entry for buying is around 8613 in present conditions but exact entry can be calculated only after seeing the pattern formed after achieving 8688.

Trades must be in limited quantity and with exact stoploss to avoid huge loss if we prove wrong in identifying the pattern.

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