Elliott Wave Structure and Current Market Context:
The Nifty 50 daily chart shows a textbook Elliott Wave corrective pattern, currently in the final leg (Wave 5) of a downward move. Here's how the waves are structured:
Technical Insights:
Bearish Flag in Wave 5:
The consolidation visible on the chart during Wave 5 resembles a bearish flag, a continuation pattern that usually precedes another downward move.
A breakdown below the 23,750 level would confirm the flag's bearish potential, paving the way for further declines.
Fibonacci Levels and Targets:
Wave 5 often aligns with the 1.618 Fibonacci extension of Wave 3, placing the primary target around 23,300–23,250.
This area also coincides with horizontal support from previous price action, adding confluence to the target zone.
In case of stronger bearish momentum, an extended Wave 5 could push prices toward 23,000, which serves as a psychological support level.
Wave Invalidation Levels:
For the bearish scenario to remain valid, prices must stay below 24,500.
A sustained move above this level would signal the start of a new bullish trend or a more complex corrective structure, invalidating Wave 5.
Refined Trade Plan:
Bearish Scenario (High Probability):
Entry: Enter short positions on a confirmed breakdown below 23,750, with increased selling volume and momentum.
Stop-Loss: Place stops above 24,000, ensuring protection against false breakdowns.
Targets:
Target 1: 23,300, the expected end of Wave 5.
Target 2: 23,000, in case of extended bearish momentum.
Bullish Reversal Scenario (Low Probability):
If prices break above 24,500, Wave 5 could be invalid.
In this case, enter long positions above 24,600, targeting 25,200, which aligns with the 0.618 Fibonacci retracement of the larger downtrend.
Key Indicators to Watch:
Volume: A sharp increase during the breakdown would validate the bearish continuation.
RSI Divergence: Check for bullish divergence in RSI near 23,300 to identify reversal potential.
Candlestick Patterns: Monitor for strong bearish candles during the breakdown or reversal signals near support zones.
This analysis provides a clear structure for trading Nifty 50 in the coming week, focusing on Elliott Wave theory and Fibonacci retracements for precision. The bearish scenario is currently favored, but traders should remain flexible and adapt to price action around key levels.
The Nifty 50 daily chart shows a textbook Elliott Wave corrective pattern, currently in the final leg (Wave 5) of a downward move. Here's how the waves are structured:
- Wave 1: Initiated the bearish trend with a significant drop.
- Wave 2: A corrective bounce, retracing to the 0.618 Fibonacci level, which is typical in Elliott Wave corrections.
- Wave 3: The strongest and most impulsive leg of the move, extending below Wave 1, with high momentum and volume.
- Wave 4: A countertrend rally to the 0.382 Fibonacci retracement, indicating a weakening bullish momentum.
- Wave 5: The ongoing move, which is expected to extend downward and complete the cycle near key support levels.
Technical Insights:
Bearish Flag in Wave 5:
The consolidation visible on the chart during Wave 5 resembles a bearish flag, a continuation pattern that usually precedes another downward move.
A breakdown below the 23,750 level would confirm the flag's bearish potential, paving the way for further declines.
Fibonacci Levels and Targets:
Wave 5 often aligns with the 1.618 Fibonacci extension of Wave 3, placing the primary target around 23,300–23,250.
This area also coincides with horizontal support from previous price action, adding confluence to the target zone.
In case of stronger bearish momentum, an extended Wave 5 could push prices toward 23,000, which serves as a psychological support level.
Wave Invalidation Levels:
For the bearish scenario to remain valid, prices must stay below 24,500.
A sustained move above this level would signal the start of a new bullish trend or a more complex corrective structure, invalidating Wave 5.
Refined Trade Plan:
Bearish Scenario (High Probability):
Entry: Enter short positions on a confirmed breakdown below 23,750, with increased selling volume and momentum.
Stop-Loss: Place stops above 24,000, ensuring protection against false breakdowns.
Targets:
Target 1: 23,300, the expected end of Wave 5.
Target 2: 23,000, in case of extended bearish momentum.
Bullish Reversal Scenario (Low Probability):
If prices break above 24,500, Wave 5 could be invalid.
In this case, enter long positions above 24,600, targeting 25,200, which aligns with the 0.618 Fibonacci retracement of the larger downtrend.
Key Indicators to Watch:
Volume: A sharp increase during the breakdown would validate the bearish continuation.
RSI Divergence: Check for bullish divergence in RSI near 23,300 to identify reversal potential.
Candlestick Patterns: Monitor for strong bearish candles during the breakdown or reversal signals near support zones.
This analysis provides a clear structure for trading Nifty 50 in the coming week, focusing on Elliott Wave theory and Fibonacci retracements for precision. The bearish scenario is currently favored, but traders should remain flexible and adapt to price action around key levels.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.