Jan 022011
 

In a recent update, I had pointed out that traders should wait for the imminent recovery to run its course, and join in the selling when we eventually get an overlap of the 6069 level on the way down. At the time of writing that comment the NIFTY was around 5944 levels. Today it has already traded at 6147, and many readers are asking whether we should sell if we get an overlap of 6069 from here. I think if we get a close below 6069, that is your first big clue of a possible sizeable downmove. Two closes below 6069 will make me quite bearish, but as always, one needs to have stops on every trade. So if you are choosing to go ‘short’ on a close below 6069, then you should protect yourself with a stop above the high seen in this run up. The target for any decline then will be around 4700. Ideally the downmove should start after we reach at least the 138.2% projection level of 6241 or better still the 161.8% level of 6330. As the latter level will be nearer to the previous significant high, one might even look for a so-called failed 5th near there. To sum up, any overlap of 6069 will be more significant if it comes from levels above 6240. Good luck!

  32 Responses to “Nifty: Elliott Wave Analysis of India’s Stock Index”

  1. Sir,

    Nifty goes below 6069 so now confirmed that wave 5 already done?

    i have a doubt though cant it be still 5th wave going on with 1-2 ,1-2 wave being done.

    • Manish,
      Once again, everyone seems to be itching to call the top before we can be comfortable that the move is over. Why dont we give ourselves a fair chance to get into a low-risk tarde? Yes, the NIFTY is showing signs of fatigue, but it didnt reach the minimum levels I mentioned earlier, so I’d prefer to be cautious before blowing the sell bugle

  2. today 5th jan…we saw a sharp decline …low i think was a 6063…but then we saw some gains to close at 6079…..now if we consider this to be the 5th wave…and todays move overlapped with 6069…the high of wave 1….now overlap of wave 4 with wave 1 is not allowed in impulse wave …except when its a eding diagonal in wave 5……this meanswe closed ot sub wave 4 of this 5th wave…..and so starts the last 5th wave of this 5th wave……but alas…all the above is only my opinion …it cant change the very next moment….if my wave count is wrong…….i think we r headed for a weak 5th wave which will not cross the 3rd wave high point…..

    i have some questions for RAMKI….i read elliot wave lessons and it says that ending diagonal 5th waves consist of 5 sub waves which have structure 3-3-3-3-3(like abc-abc—–)if the end at 6069 is wave 1 of this 5th wave…can u show me the sub waves a-b-c composing that wave 1,,,,,,a nice chart of these fractals would b very helpful….thanks in advance

  3. Dear Mr Ramki,

    I write this while the NIFTY is trading 35 points below at 6044 , 25 points below 6069 . Could you give us any advice what should we do. The quaterly results due next week and the IIP results are due on the 12th. Could we expect an upward movement for the next few days before the RBI exercises and increases the interest rates ?

    Ajay

    • Ajay, although the Nifty has violated point Q, I would like to see it close below 6019 for a couple of days before giving up on the upside.

  4. is it possible, that the 5th wave is over ie the last 6300 move n is now a double zigzaz correction.

    • Hello OK (!), Yes, it increasingly looks like that was the top, which is why I was saying once we get 2 closes below point Q we should get bearish for 4700 again. The correction that fell short of the 138.2% projection of wave A actually makes the current decline more likely to go deeper than what many would expect because it shows an absolute lack of buying interest up there from institutional investors, the people who really move the markets.

  5. Mr. Ramki. As of today Nifty has closed at 5904.60 (07/01/2011) overlapping into what is considered wave 1 inside a Wave 5 of next higher degree. What are the possibilities of Nifty going to 6414 or close to the summation series number of 6765? Or if a correction is due how much further downside exists, inside this expanded wave 4 correction? One thing is certain. Nifty surely must be on it’s last leg of rallies. I visited the Nifty charts all the way back from 1992. It clearly seems to be in a super cycle degree wave 5 having entered it’s 21st year. Just trying to figure out if we are actually in the beginning of wave 5 inside the super cycle degree Wave 5.

    • Hi Ganesh, it looks we might have already finished a 5-wave sequence above 6300 and are correcting that sequence. I dont spend too much time studying very long term waves because that is not going to help me in my trading decisions which are essentially short to medium term.

  6. Hi Ramki,

    Been following your analysis lately.

    So Nifty has closed at around 5909, substantially below the level of 6019 you were looking at. This marks the weekly closing also.

    Do you think the down trend has resumed. If yes, when is a good idea to go short.

    When you say that it failed to reach the 138.2% projection , likely projecting much deeper correction, how deep are you looking at…below 4700 also?

    One more thing that comes to my mind is that is there some time frame also by which we should we look at the scenarios unfolding since some experts do use some form of Gann or fibonacci time projections also.

    An Avid Reader

    Regards

    • Hi Puneet, A good time to sell now would be on a recovery to a prior support that will act as a resistance. Will try and post something next week. Time analysis is possible, but very difficult and easy to be misled. So I seldom try that.

  7. Dear ramki sir, I found your observation very good on nifty. please continue your good work. Thank you

  8. Mr. Ramki,
    Its great to find a site where nifty wave is being discussed and updated.
    However, is there a possibility of a converging diagonal triangle in this scenario. As wave 4 has breached wave 1. This is possible only in case of a diagonal triangle. Correct me if i am wrong..

    • OK, anything is possible, which is why wave analysis is confusing to some people. The truth is the market does what it wants, and the trader using elliott wave principle has to approach it with the known patterns and its accompanyiing rules and guidelines. The trader has to change is approach as the market changes. Usually this can be done without too much financial damage.

  9. Hi Ramki,

    I have truly been enriched following your EW posts.

    I wanted a second opinion on NBK stock Kuwait.

    Is the latest pattern a “diagonal” which eventually will violantly shift direction (go down)?

    Thank you…

  10. ok…so we go down hugely…5904…that is the 61.8% retracement from the previous top…..nifty is trading in a parallel channel……i thnk we are going to see some bounce in here to 6253 level the 127.2% extention………one more thing…….that the top was 6338 doesnt mean that that was the 5th wave…….the 5th wave can also be truncated which fails to reach the top of 3rd wave……….whatever the price the most important thing is timing…i am getting a confluence at 23 Jan………

    i read a rule somewhere….if 5th wave is not extended , the start of the 4th wave divides the whole impulse in 38 and 62 distances……..comment please

  11. 5690 hold for the third time. many calling it a tripple bottom. As per Ew it can also be wave E of a parallel triangle, which can be 4th – also alternates with a zigzag of 2 . is this possible ???

    • Hi Jazz, Let me pass you a secret. No one can tell before hand what it is going to be! You need to have a trading framework, with suitable stops. Then you execute your trades and wait for the outcome.If you are stopped, you change your count. If you make a profit, you are on the right track till you eventually make a mistake.. easy, right?

  12. Sir, Please can you giv us road map in NIFTY and wave count. What is next move ?
    Thanks

  13. Dear ramki,
    I have been keen follower of elliot wave analysis for a long time. what i have learned that there is so much exception with in elliot wave analysis, that you can prove any move of stock market by use of those exception. what i have found that it works best, when it is use in a simple 5 wave structure rather than as a forecasting tool.

    • Dinesh, Thanks for your comment. I think you have summed it very nicely. Elliott Wave Principle is a trader’s tool, not a forecasting tool. It works extremely well if you know how to use it. It doesnt guarantee your count will be correct even if you are an expert. On the other hand, it works well till you make a mistake, and when you spot a mistake (by getting stopped) you should immediately change tracks and go the right way..

  14. Dear Sir, i am new learner of wave theory ,let me know that (5,35) oscillator can help to confirm any count ,if yes then pls send some charts with oscillator. it will guide ,and give some authors list for study ,which are helpfull in learning wave ,thanks .

    best regards,
    nandu.kolhe

  15. Hi ramki,
    i have a question for you, that where we stand today in Nifty.
    whether it is last wave of ‘B’ leg of the correction, which started from January 2008 or we are just correcting in the form of a ‘ABC’ of the whole leg started from march2009. what is going to our stoplos if any of these analysis is not right.

    thanks

    • Dinesh, the honest answer is “I dont know, and I dont care”. For long-term investors, such a question may be relevant. But if we are going to come down as a C wave towards Nov 2008 levels, then the world is headed to another major crisis, something which is not looking imminent given the readiness of Central Banks to act. So, I would prefer to focus on the moves starting from Nov 2008 lows and see if we are going to correct that upmove.

  16. sir ur opinion please.

    6284 3rd wave top & irregular correction i.e. 6284-5937 (a wave)= 347*1.15= 400

    5937+400= 6337 (b wave) ‘c’ wave will be 1.618(failed) or 2.618 times of wave ‘a’
    which comes nearely at 5430 (4th wave?)

    347*2.618= 909 (6339-909= 5430)

    can we buy at this level with stop loss of 5400?

    • Hi rk, If one spends enough time at the charts, he/she could come upwith dozens of combinations and counts that will all look plausible. As I often tell my readers, one could be wrong in his count and still make money, provided he remains truthful to his count and follows the elliott wave rules and guidelines. However, I would be really careful on buying into a falling market (even with stops). It is probably better to wait for a recovery and then buy into a correction of that recovery than what you are proposing

  17. sir, now that nifty has moved towards 5400 levels, could you kindly provide outlook… in terms of what wave is playing out and the short term outlook.

  18. hi ramki sir
    thanks for your posting a chart of nifty, its get all target as u ellaborate,
    please post your future view on this

  19. sir
    pls update your view on nifty

  20. […] Jai Ho! Nifty reaches 4800! (Thanks to Vidhan for the catchy comment) This is a moment of elation for all those who believe in Elliott Wave Analysis, and how one can use it to profitably trade the financial markets. I think I did 5 posts in all about the Nifty, starting with this one: Dec 14, 2010 update and then pin pointed that once we break below 6069, we are all set. See this link.. […]

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