This Elliott Wave Analysis report of Nifty for 27 July 2016 is further updates of my yesterday’s analysis Nifty Likely to be Bullish or Hold above 8476 till July 2016 Expiry and is same which I sent yesterday to my Students/Subscribers. I am posting this report late around 9: 35 AM after marking opening as action expected in this report is already happened so that my paid subscriber will not have any objection. This analysis is report is mainly for my students/book subscribers for future reference because there is perfect example of an important pattern “3-3-5 Flat Correction” in this report.
Nifty opened mild lower today at 8633 and traded in narrow range of 20 points between 8620-8640 for most of the day but declined sharply be more than 60 points in last 1 hours before closing 45 points down at 8590.
Yesterday, I mentioned short term trading strategy as “Buy on Dips” and stoploss for existing and fresh longs at 8577 (Fresh longs only between 8605-8582). Nifty declined exactly till 8577.15 and closed without triggering the stoploss. Let’s have a fresh look at latest charts for further outlook.
Today I am covering move from 08 July 2016 low 8287 and previous waves counts are explained in my all time frames report Elliott Wave Counts of Nifty for All Time Frames as on 18 July 2016.
This is 30 minutes time bar chart of Nifty covering bounce from 08 July low 8287 which I am assuming as progress of wave (5) till now. This is same chart with explanation which I explained in my last report as there is no major change in wave counts on this chart.
It seems impulse started from 8287 where wave (4) is completed at 8476 as Simple Zigzag and wave (5) is in progress. Minimum 38% projection for wave (5) is already achieved after break above 8594 whereas next 61% is placed at 8665. Wave (5) will be in extended zone after break above 8665.
The pattern formed at top is indicating bullish scenario or holding higher levels for some more days. Let me explained the conditions:
- If the bounce started from 8476 is wave (i), (ii) and progress of (iii) then Nifty likely to move higher as wave (iii) and (v) still needs to complete upwards. This condition I am expecting as of now and will carry move with trailing stoploss.
- If the bounce from 8476 is (a), (b) and progress of (c) then there will possibilities: –
- Either this (abc) wave started from 8476 may be inner wave (i) of Ending Diagonal Triangle and it may take some more days to complete whole ED at higher levels
- Or this (abc) bounce can turns into “Irregular” wave (B) and make Irregular Correction. Nifty can decline sharply towards 8476 in this case but followed by a bounce for new high again.
So, all the conditions are indicating bullishness or holding above 8476 in coming sessions and we need to carry this move with trailing stoploss. I explained all the conditions just to make learners understand about different possibilities in different conditions so that you can think of next if one is negated.
So, we need to look at bounce from 19 July 2016 low 8476 to conclude further short term scenario and to prepare next trading plan.
This is 15 minutes time bar chart of Nifty covering bounce from 19 July 2016 low 8476 which I am expecting as start of wave (5) on first 30 minutes chart.
It seems wave (i) completed from 8476-8585, wave (ii) completed from 8585-8489 and wave (iii) in progress from 8489. And within wave (iii), it seems inner wave (3) in progress as explained on chart. Wave (iii) achieved minimum 100% projection after break above 8589 and next 161% is placed at 8665. Wave (iii) can be highly extended.
38% retracement of whole wave (iii) is a progress till now is placed at 8584 which is already broken but pattern of decline from top still looks like corrective. The pattern from top looks like “3-3-5 Flat Correction” or “Irregular Correction” as of now and the same I have explained separately on next chart.
If it is really Irregular Correction completed at 8577 then Nifty can bounce above 8644-8662 once again. Breaking below 8577 will create confusion as wave (iii) already retraced more than normal 38%. So, stoploss for longs must be 8577.
Possibility of “3-3-5 Flat Correction” or “Irregular Correction” is explained on next chart.
This is again 5 minutes time bar chart of Nifty covering today’s intraday move. The pattern of decline from top looks like “3-3-5 Flat Correction” or “Irregular Correction” as explained on chart and Nifty needs to bounce above high 8644 again if I am right at identifying this pattern.
Read about other important patterns of Elliott Wave Theory:
- Triple Zigzag Correction of Elliott Wave Theory Explained by Deepak Kumar
- Irregular Correction of Elliott Wave Theory Explained by Deepak Kumar
- Ending Diagonal Triangle (ED) Pattern of Elliott Wave Theory Explained by Deepak Kumar
For Short/Medium Term, Nifty is still likely to be positive or hold above 8476 for some more days based on the conditions explained above but 8577 must be very immediate stoploss for longs.
For trading point of view, trailing stoploss for existing (taken Friday after touch of 8526 OR in 8605-8582 range) must be 8577 for minimum upside targets 8644-8662 as explained above. And longs needs to be exited if Nifty break below 8577 to look at the pattern again and identifying next trading opportunity.
Break below 8577 may even open the possibility for 8500-8476 but any safe trade for selling can’t be decided as of now. So according to present conditions, just exit longs if Nifty trade below 8577 and wait. Next trade can be decided after seeing fresh pattern only.
Trade in light quantity as per risk tolerance and follow strict stoploss to avoid heavy losses if we prove wrong in analysis.
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