Nifty: Elliott Wave Counts

While majority of the broking houses and analysts believed that Nifty will move below 4800 and Indian Equity markets will start its multiyear bear trend, if this was possible what suddenly happened to Nifty?

Well combining advance technicals like Elliott wave analysis and simple technicals like channels, projections and retracements we come to know the possible targets, resistance and supports for particular index, stock, commodity and currency.

Nifty after making a low of 5118 never even moved below it and on same day that is on 28th August 2013 gave a reversal sign and closed near the high of the day. If we closely observe on that day it bounced from the lower end of the red channel and moved higher. We were also very sure that Nifty will find support near 5100-5050 levels which is 161.8% projection of wave A that we have marked on the chart. Using simple technicals not only helps a trader to know the possible up move or down move of particular asset class but will help to take proper trading decisions.

Nifty Daily chart

Nifty after making a low of 5118 moved higher till 5580 and then the next day it moved 200 points lower but managed to protect its low of 5118. Then gap up price action after a day, opened positive possibilities for Nifty as it not only gave bullish break in falling red channel pattern but also moved above 5580 in lesser time. Nifty has also given us an inverse head and shoulder pattern breakout by moving above 5600 which again opens further positive possibilities.

Again momentum indicator RSI has moved higher by exhibiting positive divergence and found support near 30. The level of 30 on RSI is been well respected by Nifty as it has bounced from this level several times.

From wave perspective, Nifty after making a low of 5118 completed wave C and it is currently moving higher in the form of next leg on upside. The current which is moving up seems to be impulsive and we think that it is in the 3rd wave as gap up frequently occur in wave 3. We also believe that Nifty can move till 6050-6100 very soon as it is the target of this wave.

In short, expect Nifty to move till 6050-6100 over short term as far as 5720 is protected on downside.


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