Nifty opened flat today at 7936 and traded in narrow range of 40 points for rest of the day with range bound volatility. Finally Nifty closed 7 points down at 7935 after registering day’s high of 7966 and low of 7923.

In my yesterday’s report, I expected a pause or decline of 40-60 points from higher levels may be from 7970-8014 range and also mentioned that Nifty may bounce again without breaking 7905. 7905 I suggested stoploss for longs. Nifty traded within 7905-7966 range, declined 40 points from high. Let’s see what latest charts are suggesting.

Today I am showing Elliott wave counts only from 16 Nov low 7714 as previous counts are same as I explained in my previous report Nifty EW Analysis for 19 Nov 2015 – Perfect Example of 3-3-5 Flat Correction. This 15 minute given below chart is same as I explained in my yesterday report as there is no change in wave counts.

Elliott Wave Counts of Nifty on 15 minutes chart
Elliott Wave Counts of Nifty on 15 minutes chart

This is 15 minutes time bar chart of Nifty covering move after 16 Nov low 7714.

It seems an impulse is completed from 7714-7860 followed by corrective ‘abc’ decline from 7860-7725. This upside impulse may be wave (A or 1) and downwards corrective decline may be wave (B or 2).

After completion of wave (B or 2) at 7725, wave (C or 3) has started from 7725 which seems somewhere within inner wave (3) with,

  1. Inner Wave (1) completed from 7725-7860.
  2. Inner Wave (2) completed from 7860-7813 as big Irregular Correction.
  3. Inner Wave (3) started from 7813 which achieved more than 100% of (1) and still in progress.

But, inner wave (3) of bigger (C or 3) which started from 7813 is slower than inner wave (1) which warns cautions. May be it is not wave (3) of (C or 3), and we need to be cautious. Nifty should not even touch 7905 to keep this pattern valid.

Now, let’s have a separate look at inner wave (3) of (C or 3) on 5 minutes chart:

Elliott Wave Counts of Nifty on 5 minutes chart
Elliott Wave Counts of Nifty on 5 minutes chart

This is 5 minute time bar chart of Nifty covering bounce after 24 Nov low 7813 which I am expecting as start of inner wave (3) of (C or 3).

It seems,

  1. Wave (i) is completed from 7813-7870.
  2. Wave (ii) may be completed from 7870-7823 as Simple Zigzag.
  3. Wave (iii) may be completed from 7823-7963 which is more than 161% of (1), thus extended wave (iii). I am expecting wave (iii) completed at 7963 because of continuous steepness and there is “Irregular Correction” type of pattern formed after that.
  4. Wave (iv) may be already completed from 7963-7923 or may complete at bit lower as “Irregular Correction”. Wave (iv) retraced 23% after breaking 7929 where as 38% retracement is placed at 7909. Nifty may not break much below 7909.
  5. After completion of wave (iv), wave (v) needs to project minimum 38%-61% which is placed at 7980-8015 if I calculate its projection from 7923. Levels may change if wave (iv) completes below 7923.

There is “Irregular Correction” type of pattern at top I have shown on above 5 minutes chart as wave (iv). Let’s me explore the same closely on 1 minute chart.

Irregular Correction Pattern explained on 1 minute chart:

Example of Irregular Correction Pattern of Elliott Wave Theory
Example of Irregular Correction Pattern of Elliott Wave Theory

This is 1 minute time bar chart of Nifty covering today’s decline from 7963-7923. Here I illustrated inner wave counts of “Irregular Correction” type of pattern. Please read carefully and try to understand inner wave counts.

A correction in which wave (B) breaks the start of wave (A) is called “Irregular Correction” and this correction is mostly of 3-3-5 structure, means wave (A) of Irregular Correction is often 3 wave’s (abc) move. And wave (C) of Irregular Correction is always an impulse and is often faster and steeper followed by good reversal.

Irregular Correction is known to be strong for preceding trend and we often see a good reversal after its completion. If this is really an Irregular Correction and is completed at 7923 then we can also see a gap up tomorrow followed by good upside. Wave (2) on 15 minutes chart I also shown as “Irregular Correction”

Advise for Students/Learners:

I tried to explain this pattern on 1 minute chart to show clear inner waves for better understanding. Please read the topic “Irregular Correction” in chapter “Types of Correction” of my book and try to understand. This Irregular Correction pattern can give you great “Low Risk High Reward” trading opportunities if you develop the skills to identify it in advance.


Nifty charts are indication more upside; minimum till 7980-8015 but stoploss for longs must be 7905 which is just below 38% retracement of wave (iv). 7905 can also be the stoploss for positional longs as 7906 is top of wave (2) of (C or 3) and (4) should not overlap wave (2) after completion of (3) at higher levels (See 15 minutes chart above).

So short term trading strategy must be “Buying on Dip” with strict stoploss and Nifty can be bought with stoploss of 7905 expecting minimum targets of 7980-8015 on up side. Modify stoploss to 7934 once Nifty break above 7967. Further scenario can be concluded only when we reach 7980-8015 after seeing latest waves.

Keep strict stoploss of 7905 to protect you from heavy losses in case I am wrong in identifying wave counts, we need to refer pattern again if Nifty breaks below 7905.

Any trade can be initiated only during market hours tomorrow based on above mentioned conditions with strict stoploss.

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