Study of nifty based on elliot wave principle

kingofgaming · #1 9th August 2008, 01:42 PM

Hiee friends,

As most of you know elliot wave is one of the most important tool in analyzing stock indices. Currently I am trying to figure out nifty's position based on elliot wave principle and I need your help regarding the same.

Nifty started its upward movement in May 2003. The first elliot wave was from May 2003 to January 2004. The second wave was from Jan 2004 to June 2004. The third wave started from July 2004 and went on till February 2007. The fourth wave was from Feb 2007 to March 2007. And then the fifth wave started from April 2007 and went on till January 2008.

From mid Jan 2008 the downward trend started. The first downward wave was from mid Jan 2008 to March 2008. The second from mid March 2008 to early May 2008. And then the final third wave started beginning mid May 2008. It reached the bottom (as of now) on 16th July 2008 at 3816.7. And since then it has started going up.

The main thing to consider is that technically speaking nifty should bottom out at around 3550-3600 (the end point of third downward wave in a downtrend must be at the same level as the end point of fourth wave of uptrend). But as we know this thing is not absolutely necessary, there could be some room for error margin.

So the main thing that's bugging me is this: Is the downtrend of Indian market over? Taking general view it seems that market won't start uptrend until government gets into election mood. My thinking is that once election campaigning begins politicians won't allow market to fall as their own money is involved in stock market. Also, around the same time Obama will be elected as the president of America so things just might start going great for US too.

So should we begin buying heavily or is the bottom-ing still left and market will reach about 3600 mark in coming months (august/september)?

I am really looking for an elliot wave expert to tell the answer. Plzz help.

AW10 · #2 11th August 2008, 02:23 PM

Pretty good analysis of NIFTY. I am not expert on EW but I do use it carefully in my trading. EW counting is very subjective and two analysts counting it will always come out with different counts. IMHO, one needs to look at fundamental counting rules of each wave and take IF .. . THEN ... ELSE.. type of appoach to EW analysis.
As per your analysis, currently we are in Wave 4.. Theoratically, W4 shd not penetrate W1.
IF we are in Wave 4, THEN it is time that downward move should start ELSE it is not W4 but maybe it is W1 of next 5 wave upmove.
It is also possible that Wave 3 is not yet over. W3 should be longer then W1 (and W5 which nobody knows where it is and when it is going to come). Have we met this criteria. Else we might be looking at complex 5W pattern within W3.

I don't know if I am confusing you more now. But certainly EW confused me more then this and hence I can't take my trading/ investment decision based only on EW analysis. They are great tool and forecasting key turning points and should be used in conjuction with other technical tools.. They work quite well with Fib ratios.. One of the advance EW rule tells the vertical distance of W5 form start of W1 = 1.618*W1's vertical distance.
So roughly if we take 6300 as Start of W1, and W1 ending at 4500, (diff = 1800 pts), multiply this by 1.618 ( i.e. 2930) and deduct it from 6300. .That gives us potential target of end of W5 as 3370 (i.e. =6300-2930)..

Shall we go aggressively on shopping ? Please make your own decision.

Happy Analysing and Trading

kingofgaming · #3 11th August 2008, 05:26 PM

We may be right that the downtrend is still not over and will bottom out at around 3550-3600. I talked to couple of big time analysts and they're also saying that nifty is still to bottom-out. It could that the current 3W is in 4th stage of upward movement, and the final downward 5W is just around the corner.

Of course, we can't take trading decision solely based on EWA but it does give general idea of where market is heading. It's like EWA is for long term, not for day trading.

BTW aren't there any other EW analysts?

pramod2b · #4 11th August 2008, 06:31 PM

Hi,

I am not a EW analyst. But i have a gut feeling (based on current eco environment and fundamentals) that we will still see one more down movement.