Nifty opened mild gap up today at 7824 and bounced sharply to register day’s high 7890 but failed to sustained at higher levels and declined more than 150 points from day’s high to register day’s low 7735 before closing 58 points down at 7747. It was a volatile day with huge swings.

Yesterday I expected a sudden and sharp bounce of 60-100 points without breaking below 7795 which happened in morning only when Nifty bounced 85 points within an hour after opening. I also motioned that even touch of 7795 may attempt 7740 on downside which also happened. Now, let’s look at fresh wave counts on latest charts.

Today I am showing Nifty move from 29 Feb 2016 low 6825. Earlier counts you can read in my previous analysis report Elliott Wave Analysis Report of Nifty for 02 May 2016.

Elliott Wave Analysis of Nifty for 04 May 2016
Elliott Wave Analysis of Nifty for 04 May 2016

This is hourly time bar chart of Nifty covering move from 29 Feb 2016 low 6825. Conditions are favoring the possibility of formation of Ending Diagonal (ED) on this chart after 7405 which I also mentioned in my previous analysis report.

May be wave (4) completed at 7405 followed by wave (5) is in progress as Ending Diagonal where inner wave (i) completed at 7778 as (abc), (ii) completed at 7517 at (abc), (iii) completed at 7978 as (abc) and (iv) may be in progress from 7978 as “Irregular Correction”. Nifty already broke 7778 and fulfilled the conditions of wave (iv) overlapping wave (ii) but it should not break below 7517 (start of wave (iii)) to keep this pattern intact.

So in this case, Nifty can bounce again above 7992 to complete last wave (v) of ED after completion of wave (iv). Even touch of 7515 will negate the possibility of this pattern.

Let’s have a separate look at the decline from 7992 on 5 minutes chart:

Elliott Wave Analysis of Nifty for 04 May 2016
Elliott Wave Analysis of Nifty for 04 May 2016

This is 5 minute time bar chart of Nifty covering move from 26 April 2016 low 7822.

As I explained yesterday, if we look at decline from 7992 which I have shown as progress of wave (c) of Irregular Correction (explained in 02 May’s analysis report) then it seems wave (3) completed at 7777, (4) completed at 7890 and (5) may be in progress.

Wave (5) already achieved 61% projection and in extended zone whereas next 100%-123% is placed at 7675-7624. Wave (5) may not break below its 123% projection 7624.

And if we look at inner waves of (5) started from 7890 then it seems within its inner wave (iv), and wave (v) downwards is still pending. 38%-61% projection for wave (v) is placed at 7712-7676.


By seeing all the conditions on charts, a bounce above 7992 is possible again in near term and 7675 downwards is becoming important which is 100% projection of wave (5) and 61% projection of inner wave (v) of (5).

So, “Buy on Dips” may be best trading strategy for short term. Risk can be taken to buy Nifty if get decline near 7675 expecting targets above 7992. Stoploss for longs must be below 7624. It is safe to trade in 7800-7900 Call options in light quantity as stoploss is more than 50 points. If Nifty bounce from present levels then we need to look at upside pattern to take entry and calculate stoploss.

Any trade can be decided based on above mentioned conditions using strict stoploss.