Nifty opened bit higher at 11056 and bounced further to register day’s high 11071 but declined back by about 70 points from day’s high to register day’s low 10999 and finally closed 4 points down at 11018.
Friday, Nifty was expected to decline towards 10893-10756 in coming days either from present levels or from bit higher levels but without breaking much higher above 11158.
Trading strategy was “Selling on Rise” whenever getting opportunity expecting decline towards 10893-10756 in coming days. Immediate Selling was suggested if Nifty trade below opening price at 9:31 AM (15 minutes after opening) using stoploss of 33 points, otherwise (if Nifty trades above opening price at 9:31 AM) selling was suggested in 11130-11158 range using stoploss of 11161.
Nifty opened at 11056 and was trading in 11050-11053 range at 9:31 AM (below opening price) and declined to register low 10999 without triggering stoploss and closed at 11018. Trade was giving more than 50 points profit. Now, let’s have a fresh look at latest charts for further scenario.
This analysis report is covering move after 9951 and earlier wave counts are explained in my last “All Time Frames” analysis report Fresh Elliott Wave Analysis of Nifty on All Time Frame dated 03 Jun 2018.
This is daily time bar chart of Nifty covering bounce after low 9951 which I marked as start of wave ‘v’ on daily chart in my last “All Time Frames” Report.
It seems inner wave (1) completed from 9951-10229, wave (2) completed from 10229-10111 as Irregular Correction and wave (3) may be completed at 10929, wave (4) may be completed at 10417 as Simple Zigzag and wave (5) may be in progress. [Wave (4) retraced deeper than 38%).
Wave (5) already achieved 61% projection after breaking above 11022, so we need to concentrate on its pattern now onward. Pattern of wave (5) looks like an Ending Diagonal Triangle (ED) as of now.
So, let’s analyze the progress of expected wave (5) started from 10417 on lowest possible time frame chart to check its pattern closely.
This is hourly time bar chart of Nifty covering bounce from 10417 which I have marked as start of wave (5) on 5 hourly chart. There is no change in wave counts on this chart.
The pattern of wave (5) looks like an Ending Diagonal Triangle (ED) [(3-3-3-3-3) or (abc-abc-abc-abc-abc) structure] with inner wave [i] of ED completed from 10417-10893, [ii] completed from 10893-10557 as Double Zigzag correction and wave [iii] of ED may be in progress.
Wave [iii] already achieved minimum 100% projection after breaking above 11033 and next 123% projection is placed at 11145 which may or may not be achieved. Wave [iii] of ED can never project more than 161%, so 161% projection placed at 11327 is pattern negation point for this ED on upside.
End of wave [i] is 10893 and next wave [iv] needs to break below 10893 to overlap [i] whereas 61% retracement of progress of wave [iii] is placed at 10756. So, 10893-10756 is minimum target range for completion of wave [iv] of ED. (Wave 4 of ED always overlaps wave [i]).
Wave [iv] of ED can never break below the start of wave [iii], so start of wave [iii] 10557 is pattern negation point on downside.
Now, let’s analyze the progress of wave [iii] of ED on separate lowest possible time frame to check if it is completed or not.
This is 15 minute time bar chart of Nifty covering bounce from 10557 which I am expecting as start of inner wave [iii] of ED.
It seems an impulse completed from 10557-10708 which can be marked as wave [a]. Wave [b] may be completed from 10708-10605 as Irregular Correction which retraced by more than 61% and wave [c] may be in progress from 10605. Wave [c] already projected by more than 123%, so need to concentrate on its pattern now.
Within wave [c], it seems inner wave (i) completed from 10604-10672, wave (ii) may be completed from 10708-10630, wave (iii) may be completed at 10976, wave (iv) may be completed at 10929 and wave (v) may be in progress.
Wave (v) of [c] of [iii] achieved minimum 38% projection after break above 11070 and next 61% projection is placed at 11158 which may or may not be achieved.
Overall, wave [iii] may be already completed at 11078 or may complete somewhere around 11158 and we can expect a decline towards 10893-10756 as wave [iv] after completion of wave [iii].
Let’s have a deeper look at progress of wave (v) started from 10929 to see if you can identify something interesting.
This is 5 minutes time bar chart of Nifty covering bounce from 10929 which I marked as start of wave (v) of [c] of [iii] on 15 minute chart.
It seems inner wave 1 completed from 10929-10970, 2 completed from 10970-10941, 3 completed from 10941-11078 and wave 4 may be in progress. Wave 4 retraced deeper than 38%.
If wave 4 completed at 10999 then wave 5 needs to complete above 11078 and next 61%-100% projection is placed at 11091-11148. So, Wave 5 can complete somewhere in 11078-11091 range or bit higher but not higher above 11148.
If we look at decline started from 11078, it seems wave (a or 1) completed from 11078-11021, wave (b or 2) may be completed from 11021-11071 as Irregular Correction and wave (c or 3) may be in progress.
But wave 4 retraced deeper than 38% and continuously staying below 38% retracement. So, wave 5 may be already completed at 11078 which I am not able to identify and Nifty can witness decline from present levels also.
So, 61% retracement of progress of wave (c or 3) placed at 11042 can be referred as stoploss for existing shorts.
For long/medium term,
Same as I explained in my all time frames report, Outlook for medium/long term is still bullish because Nifty is within the middle of wave (3) on largest wave cycle and there is Irregular Correction at top. Nifty has long way to go with occasional corrections (maximum 23%-38% corrections with 9918 as breakeven point and 8968 as pattern negation point. Nifty may not break below 8968 in any case in coming years before competition of larger wave cycle. We need to revise whole wave counts if Nifty ever broke below 8968.
For Short Term,
Nifty is expected to decline towards 10893-10756 is coming days either from present levels or from bit higher levels with 11145-11158 as good resistance on upside. We are expecting Ending Diagonal Triangle pattern in progress and 11327 (on upside) and 10557 (on downside) are pattern negation points for this pattern.
Overall, Nifty has possibility to decline towards 10893-10756 without breaking above 11327 but 11327 is far away, so we can use resistance 11145-11158 or internal patterns to initiate selling.
And Nifty if declines towards 10893-10756 as we expected then Nifty can bounce again for new high without breaking below 10557. Means we can expect a decline towards 10893-10756 followed by bounce for new high if I am right at identifying the progress of ED.
11042 can be referred as stoploss for any existing shorts. We need to keep all these conditions in mind.
Trading Points of View:
According to fresh conditions on charts: –
Short term trading strategy must be “Selling on Rise” whenever getting opportunity expecting decline towards 10893 keeping 11145-11158 as immediate upside resistance. Most probable trades in these conditions are: –
Those who sold Nifty near 11056 on Friday and still holding can hold the same using trailing stoploss of 11051 (some points above 11042). 10893-10756 is minimum target range on downside. Exit this trade and wait for next opportunity if stoploss triggers, and most probable trades in this case are: –
- Nifty if get in 11100-11158 range then 10900 Put of July Expiry can be bought without any stoploss expecting decline towards 10893-10756 in coming days. Trade in light/comfortable quantity because we are trading without any stoploss and the Put can become Zero. I preferred this trade because there will be minimum 200 points target (11100 to 10893) and we can get good profit if Nifty achieves this target before July expiry.
- Those who want to short Nifty futures from higher levels then short only if get in 11130-11158 range using stoploss of 11161 expecting declined towards 10893 in coming days. Use strict stoploss because actual pattern negation point is 10327 (200 points away from entry levels). If Nifty fails to touch 11130-11158 then we will look for other opportunities to sell later.
These are most probable trading conditions I can suggest in current scenario, otherwise traders can plan their own trade based on the conditions explained above.
- Fresh EW Counts and Outlook of Nifty for 09 July 2018 Onward
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- Fresh Elliott Wave Analysis of Nifty on All Time Frame dated 03 Jun 2018
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