Scenario analysis of Nifty applying Elliott wave theory!!
6th January 2015 was the day when Nifty lost more than 250 points in single day. Post making a low at 8065 levels prices have been moving higher and has touched the level of 8355 in today’s trading session. However will this rally make a new high? On the other side Crude continued to move lower and now trading below $50. Are we heading towards Energy crisis? So what will be market direction?
Elliott wave theory is one of the forecasting tools we have been applying to know the strength of trend and probable direction ahead. There are times where predictability reduces due to complex corrections. However as and when prices move further it provides important information for the upcoming trend. Below are the 2 charts of Nifty (60 mins time frame) where we have analyzed the 2 scenarios. This scenario analysis is taken from “The Financial Waves Short Term Update” which covers Nifty and 3 stocks where short term opportunity exists.
Nifty 60 mins chart:
Nifty alernate scenario 2:
Nifty scenario analysis:
As per scenario 1 shown on first 60 mins chart, the low formed at 7960 on 17th December 2014 completed minor wave (a) and post that minor wave (b) is ongoing. This wave (b) internally marked as (red) a-b-c is forming a regular Flat correction where wave b(red) of (b) retraced 76.4% level (exact) of wave a (red) and now wave c (red) of (b) is ongoing on upside. As per this count there is probability that ……………………….
As per scenario 2 shown on second 60 mins chart, prices are moving in contracting range. This is also one of the probable scenarios as even after the violent moves and one of the biggest fall of 250 points not seen in past 6 years prices have managed to protect the preceding pivot lows. This is a typical characteristic of triangle where prices move violently on one side but only to reverse back equally fast thereby resulting into no net progress but high volatility over short term. For this count to be valid the high of …………….
Advanced Elliott wave concepts suggest that during times of complex correction the probability to forecast the pattern reduces and as & when the pattern is near completion the predictability increases drastically. It is therefore important to wait for clear breakout …Meanwhile from trading perspective, one can continue to use daily bar technique. As per this method unless we see a close below ………………….
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