Saturday, July 28, 2012

Nifty - Elliott Wave Analysis

Monthly Chart
Note: The three lines marking the three scenarios are for illustration purpose only. These lines do not depict the time frame for these moves. The actual time taken will be what markets want, and cannot be predicted with much certainty.
Please refer to my last post on Nifty long term Elliott Wave Count. I only showed my preferred count on that chart, which is not the complete picture always. So I have added other possibilities on this new chart. I have this much price history only for Nifty. But that does not stop us from arriving at an informed opinion about Nifty's whereabouts in the larger trend. 
I have marked the labels to be focused on by red ovals, just concentrate on them for the moment. There are three possible options, we will go through them one by one.

1) Wave Structure - [I]-[II]-[III]-[IV] is developing.
     In this case we will correct moderately (only when you compare it with other two alternatives) to the price range of 4200-2950. Preferably closer to the lower band of this range. That is the best possible case, and we should take it with both hands.

2) Wave Structure - [III]?-[IV]?-[V]? is done.
     In this case we have completed a 5 wave move on a very large fractal (roman letters in square brackets), and the correction to that 5 wave move should reach the area of the previous wave [IV]? and it comes in the range of 1375-800. That's scary to the bone! Now we can begin to appreciate the modesty of the correction in option (1).

3) Wave Structure - [A]?-[B]?-[C]? is done.
     Now this case is here purely from an academic point of view (at least that is what I am trying to tell myself), because if this scenario plays out, we are in for a complete washout of what ever progress you can see on this chart (left bottom to right top) and some more. It is difficult to envisoin what all things, social and economical, will have to happen (go terribly wrong) before we reach the possible target in this case.

But even the first 2 scenarios are very severe, and I cannot see any reason why we won't play out the scenario (2) instead of (1). But whatever happens we can always follow the markets using wave principle, at least we can avoid being on the wrong side of a major market move. If any of these wave counts play out, not being on the wrong side of market in itself will be able to ensure your survival!


  1. hello sir,
    according to my count, wave [III] has already ended in the year 2007-2008. currently, nifty is correcting in wave [IV] which looks like a triangular correction with wave A and B of the triangle already being completed and wave C of the triangle is underway. the triangle may be a descending type in which case nifty can come down to 4000.

    1. Dear Bearish,
      Many possibilities exists as we are talking about a very large fractal. This count of triangle is possible too, but in that case we have to count the 2009-11 rally as a 3 wave move. My method is to follow my primary count till it is invalidated, then my alternate count takes over. Even in case your count of triangle plays out we have much downside to th markets, so in short we both are "bearish". :)

    2. yes sir, i am very much bearish on the markets conservatively expecting them to fall to atleast 4500 levels. As far as 2009-11 rally is concerned, i am counting it as a 3 wave move completing the wave B of triangular correction of wave [IV].

    3. Possibility of multiple counts is what makes EWP seem subjective, but if you have a plan to follow your wave counts and alter them when ever market takes a course contrary to your expectations, it becomes objective, that's when the fun begins.


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