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.
Conclusion:
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: -
“Nifty:
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.
(The perfect tool to predict the future of Stock Market)
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