Elliott Wave Pattern on Nifty Long Term Chart

Elliott Wave Analysis

In the late 1920's, Ralph Elliott discovered that markets have a rhythm and markets travel in a series of wave patterns. Elliott suggested markets move in 5 strength wave (impulse) and correction waves.

The Elliott Wave theory is complex and is very subjective for each trader. This pattern occurs in all markets and in all time-frames. The Elliott Wave has few complex rules. The wave patterns are briefly described below:

Wave 1 (Wl): The smallest of the Elliott waves and the start of the "fractal wave" pattern.

Wave 2 (W2): A retracement wave. Wave 2 should not trade below lows of Wave 1.

Wave 3 (W3): Longest and strongest of the entire wave count. Must trade above the "high" of Wave 1.

Wave 4 (W4): Usually called the "profit wave." Traders, who came in at Wave 1, will take profits. Wave 4 does not trade below Wave 2's high.

Wave 5 (W5): Also called "greed wave" or "overpriced wave." Exhaustion price movements occur before a serious correction.

After 5 wave patterns, markets form an ABC pattern in a three "Corrective waves" fashion before another series begins.

As mentioned that this pattern is applicable for all market time frame i will discuss here Elliott Wave Pattern on Monthly Time frame of Nifty. There are three important aspects of wave theory namely Pattern, ratio (Fibonacci) and time. So i have cover all the three components in analysis below. All three components are also mentioned in chart itself.

Considering the structure of Elliott Wave pattern i have drawn all 5 waves and 3 corrective waves on monthly chart of Nifty that you can see above. Nifty has covered 5 impulse waves from 1 to 5 during the period of 2008-2020. And also completed corrective wave "A" in Jan'20 to March'20 and currently trading in wave "B" corrective wave. Wave 1,3,5 took 24,38 & 46 months to complete while wave 2 & 4 took 14 &11 month to complete retracement. 

Also all 5 waves formed exactly as per principal of Elliott wave that i have mentioned above. Like wave 2 should not trade below wave 1 and wave 4 as strong support among the pattern.

After completing 5 impulse wave i think now nifty moved in corrective waves. And during Jan'20 to March'20 it has completed wave "A" and currently trading in wave "B".

Nifty has also formed retracement wave of 2,4 & A as per Fibonacci retracement level. As mentioned above that this pattern has 3 component and one of the component of ratio that is retracement ratio is also in line with Fibonacci retracement level. You can see the level on chart above.

Currently we are in corrective wave "B" but yet not confirmed because market is in uptrend. There is retracement of 78% from Wave "A" to "B" and according to that 11330-11350 is that level from where Nifty can complete wave "B". And from that level Nifty may continue with Wave "C" that is the last wave of Elliott wave pattern. But if Nifty manage to hold 11350-11400 level then it can move high towards 11700-11800 zone where 88% retracement level completed.

About last wave "C" it is quite interesting that wave "C" level generally comes below wave "B" and as per above chart 7511 is the level of  wave "B" so maximum possible level of wave "C" could be below 7511. But right no such situation is formed on monthly chart. It is just my personal view as per pattern.

My view is that once Wave "C" confirmed then we may start moving towards 10500 to 9500 level. You all are requested to please share your views if any on above observation in below comment section. 

(Disclaimer :- Whatever is shared above is as per my personal view and based on Elliott Wave Pattern. It is not necessary that market will react as per above mentioned level.)

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Thank You..

Happy Trading..

"Learn & Earn Motive Only"


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