We witnessed a volatile session today with volatile swings both side. After opening Gap down Nifty bounced sharply from 8405 to 8469 (from 161% projection of wave (c)) followed by decline till 8383. Nifty again bounced till 8462 from low followed by 110 points decline till 8352 before closing 70 points negative at 8377. Let’s analyze the latest charts of Nifty.
This is 15 minutes time bar chart of Nifty covering move after last low 8269 which I am expecting as completion of an impulse followed by correction.
It seems, an impulse is completed at high 8844 as shown on chart followed by a start of correction from top. Wave counts within this impulse are marked on chart. The correction from top 8844 already achieved 78% retracement after breaking 8392 which is more than normal retracement of 61%.
Conditions are not normal which suggests staying cautious and concentrating on very short term counts only.
Let’s see the decline after top 8844 on separate 5 minutes chart to conclude its limitations:
This is 5 minutes time bar chart of Nifty covering decline after 8844 which I am expecting as start of correction after an impulse.
- Wave (a) completed from 8844 to 8646
- Wave (b) completed as “abc” from 8646 to 8724 which retraced slightly above 38%.
- Wave (c) is in progress or completed which projected more than 161% but still there is no confirmation of its completion.
We rarely see wave (c) projecting more than 161% in Simple Zigzag, but possibilities are always there which can’t be ignored. As I am expecting the whole move after 8996 progressing as Complex Correction and inner waves of complex corrections often exceed its normal projections/retracements. So here, we need to concentrate more on Wave Cycles. Let’s have separate look at wave (c) started from 8724.
This is 5 minutes time bar chart of Nifty covering move after 8724 which I am expecting as start of wave (c). I seem, inner waves 1, 2, 3, and 4 of (c) are completed and wave 5 is in progress. Wave 3 is highly extended here and wave 5 fulfilled its minimum requirement of breaking end of wave 3. But wave 5 is still short of its minimum Fibonacci projection of 38% which is placed at 8331 where as 61% is placed at 8251 (it is below the previous low of 8269).
We need to concentrate more on this very short term chart as medium term charts has exceeds normal conditions.
And if this pattern is 1, 2 and 3 rather than ABC then we can see more low levels. We need to see how Nifty reacts after completion of expected wave (c).
Reflex Point or Trend Reversal Confirmation Point in Elliott Wave Theory:
Many times I mentioned in my reports that “there is no sign of reversal yet”. Some of my student/subscribers asked me how to confirm reversal. So, I am giving an example of Reflex Points and Trend Reversal Confirmation here on above chart. Please see Chart 3
In a Corrective “abc” decline, the start of inner wave (5) of (c) called reflex points. After completion of wave (5) of (c), an impulsive wave must complete above that reflex point to confirm reversal. And we can take entry at corrective decline after that impulsive wave which completed above Reflex Point.x
We must be cautious for new low if we don’t see any impulsive wave completed above reflex points.
In above chart, start of wave (5) of (c) is 8462. So, reflex point is 8462 and an impulsive wave must complete above 8462 to confirm reversal. But the entry will be only at corrective decline after that impulse which completed above Reflex Points with low as stop loss.
Sometime, we see an impulse completes above Reflex Point but price still achieve new low. These cases are mostly Irregular Corrections where impulse which we assuming completed above reflex point is actually wave (c) of (4) which progressed as Irregular Correction.
If we see precious impulsive move from 8269 to 8844 then next decline should be ABC Correction. And if the decline is really an ABC correction as I shown on charts then it already achieved more than 61% retracement and wave (c) also exceeds its normal limits. But still there is no sign of reversal yet.
The pattern formed at closing today is suggesting Gap Up but we need to see if it sustain above 8400 or not. Possibilities of touching 8331 are there as it is minimum 38% projection of wave (5).
Personally, I would like to wait for clear signal to initiate any short term trade. Intraday swing trades can be done after identifying smaller wave’s patterns on 5 minutes chart.
As I already mentioned in my previous reports. I am expecting here the possibilities of Complex Correction on bigger time frame and Complex Corrections are always confusing and difficult to trade.