Nifty opened flat on Friday but bounced sharply after a mild decline and traded with strength whole day to touch the 8444. Nifty reacted as per my 2nd possibility which I mentioned in my Friday’s report “If the bounce from low 8270 which is shown as waves ‘abc’ on 2nd chart is actually 1, 2 and 3 and wave (5) is already completed at 8270 then we can also see higher levels without breaking below 8305. So, watch the opening and waves after opening for further direction”.
Nifty broke 8328 and bounced sharply with the personality of wave 3 without breaking below 8305 and finally closed 114 points positive at 8433. Let’s have a look on latest charts for further scenario.
Let’s start with the daily chart first:
This is the same chart which I provided in Elliott Wave Analysis report for 25 May 2015. I am showing the same chart here as there is no change in long term counts yet and there is no difference occurred in last 5 sessions.
This is the daily time bar chart of Nifty and I started counting waves from 2013 low of 5118 from where faster impulse has been started. This charts shows that waves (1), (2) and (3) are completed from 5118 to 8996 and wave (4) is in progress which corrected more than 23% of (3) till now. I also marked inner waves of every bigger wave, please read the chart carefully. Now let me explain about some facts I have observed on this chart.
- The inner wave (5) of (3) from 7118 to 8996 is an Ending Diagonal Triangle (ED) and is highly extended. Generally we see a sharp and fast crash after completion of a highly extended wave 5 progressed as ED which retraces 100% of extended wave 5 with faster speed. But if we see slow correction or consolidation after completion of an ED then it is a sigh of bullishness. And here, there is slow correction on Nifty chart after completion of ED at 8996 with overlapping of waves.x
- Wave (4) is in progress with overlapping of waves and seems a Complex Correction which is again bullish in nature. Beside a complex correction, it is also an Irregular Correction making it highly bullish.
So, the completion of ED from May 2014 to Jan 2015 followed by a progress of complex correction from Jan 2015 till date is forming a very bullish type of consolidation pattern at top. We can expect a faster and bigger bull rally after completion of this wave (4) as Complex Correction and the upside can be 61% to 100% of whole move from 5118 to 8996. Thus, we can expect about 2000 points sharp upside rally in Nifty after completion of wave (4).
Generally we see wave (4) retracing 23% -38% of (3). Wave (4) achieved 23% till now after breaking below 8273 where as 38% is placed at 7825. So, we can expect end of wave 4 somewhere between 7997 -7825 which can be identified when it really completes.
Let’s have a look on progress of wave (4) on separate daily chart to calculate its expected bottom.
This is again daily time bar chart of Nifty covering move after Jan 2015 high of 8996 which I am expecting as start of wave (4). Wave (4) seems in progress as Complex Correction/Triple Zigzag in (abc-x-abc-x-abc) pattern where (abc-x-abc) is already completed and X2 is in progress as ‘abc’ corrective wave.x
X1 is Irregular here followed by extended 2nd ‘abc’ cycle and we generally see parallel wedge formation when X1 is Irregular. X2 need to touch or break above dotted upper blue line to validate pattern which is around 8500 as of now ( as shown on chart). Nifty needs to touch dotted blue line because there shouldn’t be any disturbance between the line joing X1 and X2 in Triple Zigzag. Whereas parallel line (upper red line) is placed around 8630.
After completion of wave X2 at higher levels, we can see last ‘abc’ wave downwards which need to go below 7997 again to complete this complex correction followed by the start of new bull rally for new high.x
Let’s have a look on the progress of wave X2 on separate 15 minutes chart for its separate calculations.
This is 15 minutes time bar chart of Nifty covering move after 07 May 2015’s low 7997 which I am expecting as start of wave (X2).
It seems wave (X2) is in progress with an impulse completed from 7997 to 8332 as wave (A) followed by corrective decline from 8332 to 8091 as wave (B) as shown on chart. And there is a start of wave (C) from 8091.
Wave (C) already achieved 100% projection of wave (A) after hitting 8426 but wave counts are not suggesting its completion yet. Structure of wave (C) is still suggesting it somewhere in inner wave 5. 123%, 138% and 161% for wave (C) is placed at 8505, 8553 and 8633 respectively which are possible in next sessions. Break above 161% (8633) may change the scenario.
Within wave (C), it seems waves 1, 2, 3 and 4 already completed and last wave 5 is in progress. Wave 4 went deeper which retraced wave 3 by more than 50%. 61% projection for wave 5 is placed at 8477 but high of wave 3 is 8489. So, Nifty need to break 8489 at least to avoid failure wave 5th which further will make wave 5 extended. Thus, we can also expect sharp decline after completion of wave 5 or (C).
70% for wave (5) of (C) is placed at 8505 which is also 123% projection for wave (C) and 100% is placed at 8606. 161% for wave (C) is placed at 8633 which should be treated as last limit of (C), we need to recheck our counts if Nifty manage to break above 8633.
Let’s have a look on wave (5) of (C) on separate 5 minutes chart:
This is 5 minutes time bar chart of Nifty covering move after last low 8270 which I am expecting as start of wave 5. It seems inner wave 1, 2, 3 and 4 are completed and 5 is in progress. 61% projection for wave 5 is placed at 8461 where as 100% is placed at 8516.
May be inner wave 3 of (5) is still in progress and this 5 can go higher than 8516. We need to observe tomorrows wave for further clarity.
From latest charts, Nifty can bounce minimum above 8490 again may be till 8633 followed by a start of decline for 7997 and below. The decline from high must be faster and volatile if it is actually the last ‘abc’ cycle of Triple Zigzag.
Then, we can expect a great bull rally of about 2000 points after completion of wave 4 within 7997-7800 range.
These levels are just estimates and exact nearby levels can be identified only when wave is near to its completion. So, first concentrate only on 8490 -8633 range on upper side and then decline below 7997. Further scenario can be concluded later.
Never trade heavily by seeing bigger targets. Never trade with over confidence and without stoploss. Never lose big in hope of big profit. There is every possibility for this analysis to go wrong. If I am wrong in identifying pattern correctly and bottom is already made at 7997 then this bounce to continue above new high but the bounce must be sharp and faster in this case. Anything above 8633 will disturb this normal bearish pattern.
Note: This analysis of Nifty is purely based on Elliott Wave Theory without considering other technical, fundamentals, news or important events. This analysis is just homework and any trading decision can be done only after identifying short term wave patterns with small stoploss. Read my daily analysis reports for latest updates and short term levels.