Monday, December 29, 2014

Elliott Wave Analysis Report of Nifty for 29 Dec 2014 by Deepak Kumar

Nifty opened Gap Up on Monday and bounced sharply till 8234 just after opening but didn’t managed to sustain at higher levels and fall 90 points from high within next 20 minutes and traded in 8150-8180 for rest of the day. Nifty closed 26 points up at 8200. Let us see further probabilities on charts:

This is 5 minutes time bar chart of Nifty showing move after 16 Dec low of 7963. The move from low 7963 to 8364 can be taken as impulse as it doesn’t carry the personality and structure of “abc”. Most probable inner waves of that impulse are marked on chart.

If it is impulsive then next move must be corrective “abc”. Next decline after 8364 is also hard to identify. I worked for an hour and come to the conclusion that: -

Wave (a) completed from 8364 to 8218
Wave (b) completed from 8218 to 8255, which is just 23% of wave (a)
Wave (c) is in progress or completed which achieved minimum projection of 61% of wave (a) till now and 100% placed at 8109.

If I am right at identifying, then Nifty can start new impulse upside after completion of wave (c). Now, we need to see wave (c) started from 8255 closely.

This is 5 minutes time bar chart of Nifty showing decline after 8255 which I am assuming as start of wave (c).

It seems wave (c) is already completed at low 8148 with five inner waves as marked on chart. And there may be the start of new upside impulse.

It seems wave (1) and (2) of next up move is already competed and (3) is in progress. I am not marking inner waves of (3) yet but there is an identification of small wave 1, 2 and 3 at the extreme last (marked on chart). So, I can place stop loss for my existing longs just below the top of extreme last wave 1 which is around 8180 spot shown by red line.    


Current set up on chart is suggesting upside till 8364 and above but Nifty should not decline below 8180 according to pattern I shown on charts. So, stop loss for existing long should be 8180. And fresh entry can be taken only during live market hours after identifying latest waves.

Taking Low Risk Entry with Elliott Wave Analysis

This is the analyzed chart I prepared and posted in my analysis report for 26 Dec 2014.

Below is the action I taken based on this homework on 26 Dec 2014 and caught perfect bottom to buy. The trade posted on 26 Dec 2014 on my Facebook Timeline and my Facebook Group “Practical Application of Elliott Wave Theory” was: -


I would like to Buy Nifty with 8133 spot as Stop loss...!!!

Edited/Update: (Stop loss 8121 for some time.. Will enter full if Dip below 8148 again.. Stop loss for my full position is Rs. 4600..!!)

Now, why I traded/bought?
If you see extreme last of the second chart then I was expecting wave (3) of impulse is completed and wave 5 is still pending which need to go below low again. I calculated levels of wave 5 based on recent high achieved by wave (4). But wave (5) has to go below wave (3) again..
So, Yesterday (26 Dec 2014), Nifty opened Gap Up and started rising faster. But I didn’t buy as I was not convinced of up move without breaking below low (without completing wave 5). So I ignored it and decided to wait. Here Wave Cycles helped me to wait.
Then Nifty declined sharply from 8234 and without overlapping wave (2), it was qualifying for wave (5). The sharp declining move was also impulsive and it breaks below previous low, thus qualified for wave (5) which is shown in latest chart above. As Wave (4) corrected deeply, made wave (5) already extended more than 61%. So, I didn't hesitate to take buy entry just after hitting new low with 100% extension of wave 5 (as wave 3 was already 461% (highly extended) of 1). Read the chapter extended waves and calculation of waves.
Here Wave Calculation helped me to take entry. Remember I took buy entry when most of the traders were scared after seeing 90 points fall in just 20 minutes and some analysts were already talking of 7700 levels.
I took entry because,
Either it will be a start of next impulse after wave (c). Or if it is not wave (c) then also Nifty need to give some corrective bounce after completion of Impulse.
So, I just take entry because a small or big bounce was expected and I just decided to buy with stop loss and using trailing stop loss after that as one possibility is suggesting Nifty above 8365 again.
Now my trade is already in 50 points profit and my trailing stop loss is 8180, 24 points above my cost. I caught perfect bottom and have no pressure holding longs as I will be in profit even if my trailing stop loss hits. (I will be in loss if Nifty opens 50 points gap down on Monday).

This EW analysis report of Nifty is a part of 02 months FREE service for my book subscribers.

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