This is same Elliott wave analysis report of Nifty for 14 Sep 2016 is further reports on my last analysis report Nifty Still Looks Positive Next Week Commencing 12 Sep 2016 as there is change in whole wave pattern and this is the same report which I sent to my subscribers and student. I am posting it on my blog for the purpose of future reference of my students because formation of expected Irregular Correction pattern is explained in this report.
Nifty opened huge gap down on Monday at 8732 and consolidated within 46 points range from 8700-8746 for rest of the day before closing huge 151 points down at 8715.
Monday, short term trading strategy was “Buying on Dips” towards 8830-8805 using stoploss of 8799 expecting targets above 8968. Further, I mentioned that if Nifty has to fall then will fall so severely that it may not give chance to sell. Also advised to avoid shorts even if Stoploss for longs hits because we couldn’t calculate stoploss unless we see the pattern. Nifty opened well below our stoploss 8799 traded in very narrow range for rest of the day. Let’s have a fresh look at latest charts for further scenario.
Today I am covering move from 29 Feb 2016 low 6825 and previous waves counts are explained in my all time frames report Elliott Wave Counts of Nifty for All Time Frames as on 18 July 2016.
This is daily time bar chart of Nifty covering move from 29 Feb low 6825. Nifty is rising from 6825 without even a 38% correction in between but with lots of overlapping which makes it difficult to identify inner waves confidently.
By casual look it seems an impulse completed from 6825-7992 which could be wave (A or 1), decline 7992-7678 may be wave (B or 2) and wave (C or 3) may be in progress from 7678. Wave (C or 3) already achieved 100% projection after breaking 8941 whereas next 123% is placed at 9120 which is exactly the all time high.
Within Inner wave (C or 3), it seems inner wave (iii) of (3) is completed at 8728 and (iv) may be in progress as Irregular Correction. Earlier I have shown wave (3) of (C or 3) completed at 8728 but earlier corrective wave (2) of (C or 3) was already Irregular Correction and (4) also looks like Irregular Correction which is not normal (wave 2 and 4 normally have different patterns). So, maybe it is just wave (iii) of (3) completed at 8728 and (iv) of (3) may be in progress from 8728 as explained on chart. Please read the chart carefully.
Now, if wave (iv) of (3) of (3 or C) is really progressing as Irregular Correction then Nifty can once decline around 8540 [end of wave (a) of (iv)] or below followed by bounce above 8968 again as shown on chart by imaginary lines. But this is just a picture to keep in mind as possibility and not to take it as granted, however we need to concentrate on decline from 8968 for time being.
Let’s have separate look at decline from 8968 on 5 minutes chart to prepare further trading plan.
This is 5 minutes time bar chart of Nifty covering decline from 8968 which I have show as possibility of inner wave (c) of (iv) progressing as Irregular Correction.
The huge gap down from 8962-8832 without bounce back is suggesting that this gap down is some sort of wave (iii) or (3). And if look at whole pattern then it seems wave (1) completed from 8968-8920, wave (2) completed from 8920-8960 as very complex type of Irregular Correction and wave (3) started from 8960.
And within wave (3), inner wave (iii) may be completed at 8699 and 23%-38% retracement for wave (iv) is placed at 8748-8778. So, the point above which we can think of any reversal is 38% retracement of wave (iii) 8778 and stoploss must be some points above 8778. Whereas minimum 38%-61% projection of wave (v) (calculated from 8746) is placed at 8646-8584 which is next possible level on downside.
Expected targets of 8968 are delayed now as wave (5) which we were expected upside has possibility to turn into wave (iv) as Irregular Correction. The waves were progressing as simple impulsive waves from last 40-45 days and we were identifying it accurately but there is possibility of Irregular Correction now. Irregular Correction can be managed easily but this Irregular was bigger than normal where irregular wave (b) was of more than 400 points but still we managed to avoid any loss.
Please read this article Irregular Correction of Elliott Wave Theory Explained by Deepak Kumar carefully to understand that how Irregular Correction confuses, how we can deal with it and how we can turn into great profit opportunity later.
Now for Medium Term, there is possibility of Irregular Correction at top because of which a decline towards 8540 or below is expected followed by bounce above 8968 again. But this possibility is just to keep in mind and not to be taken as granted. We just need to have patience and save capital because we can get a very good opportunity to catch the rally of 400-500 points if this decline is really going to be wave (c) of Irregular Correction.
And we need to concentrate on decline from 8968 and trade for smaller moves with small stoploss till then.
Trading Point of View:
For Short Term, Trading strategy must be “Sell on Rise” on every 23%-38% retracement of wave (iii) of (3) with stoploss above 38% expecting targets of new low of this decline. 23%-38% retracement of wave (iii) is placed at 8748-8778 from last low 8699. So stoploss for Sell at present must be 8781 (3 points above 8778) and expected downward targets are 8646-8584.
And further, keep calculating the range of decline from 8908 [start of wave (iii) of (3)] to new low and sell whenever you see 23%-38% retracement (bounce) of this decline from 8908 with stoploss 3-5 points above 38% retracement expecting new low as target. Look at the chart how I calculated 23%-38% retracement and downwards targets. This must be short term strategy as of now. Use very strict stoploss of 3-5 points above 38% retracement.
There will be no further updates on this blog this week, so please manage trades accordingly if anyone trading based on this report.