Nifty opened huge gap up today at 7924 and declined till 7874 followed by range bound consolidation between 7880-7920. Finally, Nifty gave breakout above 7924 and bounced till 7957 before closing 105 points up at 7948.
Nifty bounced till 7926 yesterday and declined 100 points from there and I thought wave (2) may be completed as it was very near to 61% retracement of 7928 but today opened at 7924 and then entered in 7928-8021 range which I was talking in all of my previous reports. Waves achieve their minimum retracement/projections most of the time. So, let’s have a look on latest charts.
Today I am covering wave counts after 18 Sep 2015 high 8055 only as previous counts are same as I explained in my previous analysis report. Read Elliott Wave Analysis and Updates of Nifty for 29 Sep 2015.
This is 15 minutes time bar chart of Nifty covering move after 18 Sep 15 high 8055 which I am expecting as a start of wave (5).
Now, we can see some signs of Ending Diagonal on this chart as:
- It may be wave (1) of ED completed from 8055 to 7723 as ‘abc’
- Wave (2) of ED may complete somewhere below 8021 as Irregular Correction.
- We can expect minimum decline of 332 points from completion of wave (2) as wave (3) is more than 100% of wave (1) in most of the cases and wave (1) is of 332 points here.
Let’s analyze wave (c) of 2 separately on 5 minutes charts to calculate estimated end of wave (2) of ED.
This is 5 minutes time bar chart of Nifty covering move after 29 Sep low of 7691 which I am expecting as start of inner wave (c) of (2) of Ending Diagonal.
It seems wave 1, 2, 3 and 4 is completed and wave 5 is in progress. Wave (3) is less than 161%, thus not extended so we can expect extended wave (5) [more than 61%]. Wave (3) is slower than wave (1) but there is no other pattern we can identify here.
61% projection of wave (5) is placed at 7970 where as 100% is placed at 8059 which is rare case. If we look at inner waves of (5), it seems inner wave (iv) is already completed and last wave (v) is in progress.
61% of wave (v) of (5) is placed at 7935 which is already achieved whereas 100% and 123% is placed at 7974 and 7997 respectively. 161% for wave (v) is placed at 8035 which is a very rare case.
So, after analyzing all the conditions, 7970-8021 range is a danger zone for sharp decline of 332 points and then 7541 in coming days/weeks. And breaking above 8035 is a rare possibility for Nifty before a reasonable decline.
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Overall Nifty can decline below 7541 in coming days/weeks to complete wave (5) and 7970-8021 is range of caution for decline. This decline can go below 7541 but with lots of volatile swings as overlapping as wave (5) is expected to progress as Ending Diagonal. Break above 8055 will negate this pattern.
So, Nifty can be sold in 7970-8021 range expecting a sharp fall of 332 points and then 7541 in coming days. 8037 could be the immediate stoploss for shorts as explained above otherwise 8057 should be a definite stoploss for shorts.
Small and safe traders may buy Nifty 7800/7700 Oct puts with stoploss of 8057 as we can expect faster wave (3) to go below 7691. Or conditions are also suitable for Hedge Trading.
Please trade light in limited quantity with strict stoploss to protect yourself from heavy losses if we proved wrong in identifying pattern.
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