This analysis report of Nifty for 08 April 2016 I am publishing as updates on my previous report Nifty Can Bounce Above 7777 Once Again Before Further Decline as pattern I had explained is negated after a touch of 7585.
Nifty opened gap up today at 7630 but declined sharply just after opening and traded with negative bias volatility for rest of the day. Nifty declined more than 90 points from morning high to register low of 7535 before closing 67 points down at 7546.
Nifty again negated the expected pattern after touching 7585 and declined further to 7552-7413 range as expected. Let’s have a fresh look at latest charts now.
Today I am showing Nifty move from 29 Feb 2016 low 6825. Earlier counts you can read in my previous analysis report Elliott Wave Outlook of Nifty for Budget Day 29 Feb 2016 Onward.
This is 30 minute time bar chart of Nifty covering move from 29 Feb 2016 low 6825.
As I explained in my last analysis report, it seems wave (1) completed from 6825-7094 and wave (2) completed from 7094-6969 then wave (3) started from 6969. Wave (3) extended sharply with just 23% correction in between.
The bounce from 6969 to 7539 is straight with just a 23% correction in between and with unfilled gaps. So, it is difficult to identify waves confidently. It may be wave (3) or inner wave [(iii) of 3] completed at 7539 and wave (4) or inner wave [(iv) of 3] completed at 7405. Now there are 02 conditions on chart: –
- If it is wave (4) completed at 7405 then wave (5) already achieved its minimum 38% projection and seems near to completion. Nifty can give 38%-61% correction of whole bounce from 6825-7749 in this case after completion of wave (5) at higher levels.
- If it is inner wave (iv) of (3) completed at 7405 then wave (v) of (3) also achieved its minimum 38% projection and seems near to completion. Nifty can give 23%-38% correction of whole bounce from 6825-7749 in this case after completion of wave (5) at higher levels.
Now, Nifty already declined 23% from high 7777 and 38% retracement is placed at 7413 but the last upside wave from 7749-7777 doesn’t carry a clear confident pattern. Once again a wave completed with some confusion. We are able to identify waves with 90% success but last 10% is missing where there is opportunity to trade. Nifty is completing every wave with small confusion in the end and the same is happening from last 01 Month.
As there is lack of confidence in the wave pattern completed in last leg from 7749-7777, we need to concentrate on decline from 7777 for further outlook.
This is 5 minutes time bar chart of Nifty covering decline from 31 Mar 2016 high 7582 which I have shown as start of inner wave (4) on above 15 minutes chart.
It may be wave (A or 1) completed from 7777-7666, wave (B or 2) may be completed from 7666-7764 and wave (C or 3) may be completed at 7536 or is still in progress.
And within wave (C or 3), inner wave (4) may be completed at 7638 and minimum 38%-61% projection for wave (5) is placed at 7570-7528. Wave (5) already achieved minimum 38% projection whereas 61% is placed at 7528 but pattern is not clear yet.
No matter if it is wave (C) or (3) going on from 7764, a small bounce as 23%-38% retracement of wave (C or 3) started from 7764 is expected which could be of 50-90 points from low. Bounce can be from present levels as wave (5) of (C or 3) already achieved minimum 38% projection OR after achieving 7528 (may be from 7528-7510 range).
Further, things will be clear after seeing the pattern of bounce. Even touch of 7666 will open the possibilities from a high above 7777.
Nifty touched 7585 yesterday to negate the pattern and also declined below 7552. Once again a wave completed with some confusion. We are able to identify waves with 90% success but last 10% is missing where there is actual opportunity to trade. Nifty is completing every wave with small confusion at the end and the same is happening from last 01 Month.
These conditions were good for hedge options trade as we were already expecting that immediate top is very near and even expecting a good decline as explained in my previous report Nifty is Preparing for a Good Decline in Coming Days – Elliott Wave Analysis but trade in options was also not safe because of lots of holidays in coming sessions. We have only 03 working sessions next week.
As there is lack of confidence in the wave pattern completed at 7777, we need to leave it and concentrate on the waves of decline started from 7777 only until we see any clarity on bigger pattern.
For very short term,
Nifty can give some bounce of 50-90 points from present levels or from 7528-7510 as explained above. Further we need to look at the pattern of that bounce because that bounce will either be wave (4) or a new impulse for new high. Even touch of 7666 will open the possibility of new impulse upside for high above 7777.
So, Stoploss for very short term longs must be 7509 and Stoploss for shorts must be 7666. Any trade can be decided based on above mentioned conditions with small stoploss.
Some people are asking if there is a possibility for big decline but I am not confident at it as pattern completed at top (7777) is not convincing. I would like to go step by step.