Nifty opened huge Gap down today but failed to fill Gap after opening and decline 200 points from previous close end of the day. Till yesterday I was expecting the possibilities for some bounce from 8497 -8474 range seeing chart structure. But I was not confident for buying as nifty didn’t show the sign of reversal yet.
Today gap down open below 8474 and failed to cover Gap after opening negated previous pattern I was assuming. Unfilled gaps are only within wave 3 and there is always a sharp and fast move during wave 3 which Nifty shown today.
This move I expected some days before but Nifty slower down in 8540 -8600 range. And now, Nifty covered that move in single day today.
Now, there is some clarity in medium term charts. Let’s have a look.
This is daily time bar chart of Nifty covering move after 2013 low of 5118 which I am expecting as start of inner wave 3. This chart I explained many times in my previous report Nifty Updates and Elliott Wave Analysis for March 2015
Here, inner wave (3) of 3 is completed at 8996 followed by start of wave (4) which is an irregular correction. Inner wave (v) of (3) is Ending Diagonal Triangle and highly extended which I explained many times in my previous reports. Wave (4) started from 8996 can end somewhere between 23% to 38% retracement of (3) which is placed at 8273 to 7825. Wave (4) can also end above 8273 but we can always expect wave 4 to break below lower line of Ending Diagonal Triangle as Correction after Ending Diagonal Triangle often breaks line joining its inner wave 2 and 4. The actual levels can be calculated only when this wave really completes and these are just estimated levels.
Let’s see progress of wave (4) started from 8996 on separate hourly chart.
This is hourly time bar chart of Nifty covering move after Feb high 8996 which I am expecting as start of wave (4).
It seems, wave 4 is progressing as complex correction (most probably Triple Zigzag) and we still needs confirmation for it. There is a “abc” wave from 8996 to 8473 followed by an Irregular wave (X1) from 8473 to 9117 and there is a start of next “abc” cycle from 9117 which is in progress and already breached the end of 1st “abc” cycle after breaking below 8473.
In 2nd “abc” cycle, waves (a) and (b) are completed and (c) achieved minimum 61% projection at 8475 whereas 100% and 123% is placed at 8283 and 8163 respectively which may or may not be achieved.
Let see today’s move on 5 minutes chart:
This is 5 minutes time bar chart of Nifty covering last hour’s move of Nifty. Today’s decline was steep in single line and it was expiry, so wave counts are not clear. So, I would like to wait for tomorrows move to predict next scenario as I am not able to conclude something confident from today’s move.
Structure on chart at closing is suggesting some bounce from 8342 tomorrows but open below or break below today’s closing 8342 may show new low again.
I am not able to conclude anything confident on short term chart because of steep decline. May be tomorrow charts will show something. It is not a deficiency of an analyst but it is a nature of Market. Market is not always easy and there are some time periods when it is difficult to read market. We must keep patience in tough time and wait for safe opportunity, sooner it will show the pattern.
On Medium Term, Nifty is progressing in Complex Correction Pattern and there may be good upside rally of 1200 to 1800 points after completion of this correction. But expect some volatile and confusing moves in between this correction. So, limit your trading, focus on intraday trading and trading with strict small stoploss in next sessions till completion of wave (4).
Never lose your capital unnecessary and save it for next big upside rally which will be easy to trade for big targets with great risk reward. And this opportunity will come soon, just have patience and save your money from volatile/confusing moves till then.
By Deepak Kumar
(This article was originally published in the Author’s blog)