iCharts Discussions

prasad_rajmane · White Belt Joined: 10 Jun 2008 Posts: 2

Elliott wave theory identifies 8 waves in any trend either upward or down trend and it assumes to repeat the same style of waves further unless a trend reversal is identified. Even when the trend reversal is identified, the same 8 waves are repeated in the opposite direction.

From the daily chart of NIFTY, we can observe that NIFTY has made its all time high at 6157 on 10 January and since then the downtrend was observed. As per the Elliott wave theory, it completed its first wave in downtrend on 22 January when it closed on 4899. Further it completed its next 2nd, 3rd, 4th and 5th waves on 05 February, 12 February, 27 February and 18 March when it closed on 5484, 4838, 5268 and 4533 levels respectively. After a strong downtrend, as explained by Mr. R. N. Elliott, a little upward movement was evidenced and wave a, b and c were formed on 28 March, 07 April and 02 May with NIFTY closing on 4942, 4761, 5228 respectively. From 10 January to 02 May, NIFTY made all the 8 waves as explained in the Elliott Wave theory. The same waves were started again and NIFTY competed its 1st and 2nd waves on 14 May and 20 May with NIFTY closing on 5012 and 5158 respectively. Since then NIFTY was in Elliott wave 3.

Today on 11 June we observed bulls taking over on bears which helped NIFTY to close on 4524. Also on analyzing 5 min. chart for the last 15 days, we can see that NIFTY is in the process to form inverted head and shoulder which is a bullish trend reversal signal [for short term period as the data analyzed was of very short term with 5 min. candlesticks]. Thus we can expect today’s close as the end of Elliott Wave 3 and can expect NIFTY to move up for some time. As per the Inverted Head and Shoulder pattern as reflected in Chart No.3, the target price comes to be around 4700, which is well below the end of 2nd Elliott Wave.

Concluding, in the short period of time, NIFTY may touch 4700 level and may again fall back to 4081 which is the major support level. I hope accordingly we all should plan our investment strategies.[/img]