Sunday, September 27, 2009

Wave counts for the Nifty

Nirav had sent a chart for the Nifty which shows his preferred wave count.
[edited: the chart removed, comments abidged to make this easier to understand]

His up waves start from the July lows made at 3915 approx.
His comments are given below:

As shown in the chart the 3rd wave target can be as follows;
There are many possibilities which are as follows;
If 3rd wave is 100% of 1st wave i.e. 100% of 813 = 813. There for target will be 4353+813=5166.
Now, if we take 1st possibly of above mentioned. Then if we consider 4th wave is 38.2% of 1st wave i.e. 310. Then its target will be 5166-310=4856.
And after this 5th wave targets can be as follows;
If 5th wave is 61.8% of 1st wave i.e. 61.8% of 813=502. There for target will be 4856+502=5358.
If it is 100% then target will be 4856+813=5669. And so on….

Nirav wrote in an email to me:

"I regularly follows your blog and getting benefit of it.

I have tried to forecast Nifty with Elliott Wave Theory. This may or may not be possible wave. I am sending you this forecasted sheet with this mail. Kindly find the attached file and please go through it. And please let me know whether it is correct or not? "

My Notes:

I am responding to him on the blog since I felt that the issues will be of interest to many readers.

Nirav has started his wave counts from the low made at 3915 in July. This is sensible since the more recent price movements are likely to give better forecasting results. Something that happened in July 09 is likely to be more relevant in Sept 09 as compared to a price event that took place, say, one year earlier.

Once the start of the wave counts is accepted, then the counts themselves become easy to identify, and, these have been properly selected in his chart.

Now comes the difficult part: How do you trade this?

The minimum target for the 3rd wave is 5166 while the Nifty is currently at 4965 approx.

Do you assume that you are in an ongoing wave 3 UP? If so, what is your stop?

My answer is: Yes, assume that this wave 3 is continuing. The point at which this assumption will be proved wrong is 4700 when the Nifty moves below the wave 1 high. Such wide stops are relevant to position tarders, but swing traders must identify other stops.

The big trade will come when the Nifty corrects to wave 4. Then, we can assume that another wave 5 move may come which should be a fairly large move.

Readers may like to share their ideas on how to trade this wave count, if you broadly agree with it.

8 comments:

Shazia said...

Sir,
I think it is quite a possibility, I even think that the dow is in the third wave range and if our markets are in sync US more then also quite possible.
Thanks
Shazia

Pramod said...

This is the first time i have visited this site. my analysis too matches with this. Right now it looks like short nifty with target 4727. We have to wait till 4723 for long position and with stop at 4690.
Pramod Shinde

kaps said...

Beginning a wave count like that could be misleading also.I think if we can correlate the wave counts from a significant support level, that will be better(like oct08 or mar09 lows).I feel in the mentioned wave counts,wave 3 personality is not what it usually is, ie sharp and swift.Albeit its slower than wave 1.
These are just my thoughts, I may not be wrong also.

gaurav said...

This count looks quite acceptable.One argument to this wave count is that it was an ascending triangle correction for as wave 4 of bigger wave and wave 5 has started from around 4750 and this last wave 5 is difficult to count.
Another note I would like to mention as we are linked to US market and US has formed 5 wave down move in the big fall and correction of 3 wave in S&P has max target of 1130 and there is good possibility that it has completed 3 waves or completing very soon which can help us positioning ourselves for India.

Nirav said...

Thank you Sir for your valuable comments on my query. This will help me for my future prediction and trading.

Gindi said...

why every1 is talking abt only elliott waves, consider the breakout of ascending triangle too. With high of 4743 n low 4353 of the ascending triangle the tgt comes out 5133. But we should also consider events like selling of treaury shares of RIL, which affected the technical movement of RIL n hence nifty. If ril was trading without such effect probly nifty would hav hitted 5133. So now get ready for a correction also

B M Kajaria said...

Hello,

Wave Principle:

Wave 3 = 1.618 x wave 1
Wave 5 = wave 1
Wave 2 = 0.618 x wave 1
Wave 4 = 0.382 x wave 3

As per wave principle my target for Nifty may be as follows.

Wave 1 Length = (June 10 closing - March 9 closing) i.e. 4655.25 – 2573.15 = 2082.1 Points

Wave 2 Length = (June 10 closing – July 13 closing) i.e. 4655.25 – 3974.05 = 681.2 Points

Wave 3 Target = (July 13 closing + (Wave 1 * 1.618 i.e. 2082.1* 1.618 =3368.83)) i.e. 3974.05 + 3368.83 = 7342.88

Wave 4 Target = (Wave 3 Target – (3368.83*.382 = 1286.9)) i.e. 7342.88 - 1286.9 = 6055.99

Wave 5 Target = (Wave 4 Target + Wave 1 Length) i.e. 6055.99 + 2082.1 = 8138

gofi said...

As per Elliot wave, we are in the 3rd wave of the C wave (A-B-C corrective wave for the entire fall from 2007 high to 2008 lows).