Trading NIFTY using Elliott Waves by Ramki of Wavetimes.com
In my last Elliott wave update on the Nifty Index (posted on 3 July 2013), I had presented you with a big picture scenario. The third chart in that post had one level as 5112 being 61.8% of wave A. It is gratifying to note that on 28 August, the index reached within 6 points of that level (5119) before it commenced another move higher. To those who don’t understand markets, 5119 will appear far away from the 4300 level which was written in my notes at the bottom of that chart. These people will have serious difficulty in making any money if they pursue technical trading. There are a couple of things that one needs to understand about Elliott waves. A big picture outlook is just that. It gives us a broad road map. Timing an entry to capture the next large move will demand paying careful attention to waves in the shorter cycles. In today’s post, I am presenting you with an example. This is a 10-minute chart! You can see that I have put some tentative Elliott wave labels on it. These are still work-in-progress, and are by no means conclusive.
In my book “Five Waves To Financial Freedom” I have explained in detail what happens when a five-wave move is completed. The main challenge lies in determining whether the move is actually finished. There are many ways of counting a move, and what you see here is one example. A short-term trader could have benefited by counting it like above, and by selling at 6220 with a very tight stop. I have often stated that trading the markets requires a little more than an ability to count waves. This is where many of us suffer from weakness. We choose to believe that what we are able to ‘see’ is how the markets will behave. If there is one important lesson you need to master before you expose real money it is the willingness to accept you could be wrong, and knowing beforehand what you will do when you are proved wrong. You need to evaluate various scenarios, and determine which gives you the best risk-reward trade off. Then, you need to be patient for the markets to come to your desired level. And if it does come there, you need the courage to actually pull the trigger!! And finally, you need to be diligent to monitor the position to take corrective action if the market sends out fresh clues that are counter to your thinking. It is precisely because of these challenges that you need to be wary of trade ideas that come at you thick and fast from various sources, including TV channels. It is so easy to say ‘buy here with a stop there’ and not bother with that recommendation beyond that date. After all, there are new recommendations for you to look at the next day!! Anyway, I wish you good luck with your trading. This blog aims to teach you the methods, and nothing more.
Ramki of WaveTimes.com
first of all i have to thankyou for marking me an email ,now your labeling for nifty
is almost clear, but for in any textbook there is no mention about big gap within Bwave
any how new experience but truth is that i am learning elliott wave from u r book and
sids elliott wave.
Nanda Kumar! you have sharp eyes! Although we don’t usually see gaps in B waves, the speed of the reversal and the decline to lows below start of a wave! followed by another rally gives credibility to count it that way at that time. Remember that all wave counts are work in progress, and are meant to aid your trading. If you have labeled it the way it was shown, you could have scalped the market several times till we reached the top at 61.8% of 0-3. After today’s move to a new high, that wave count is no longer valid, but it would have served its purpose till proved wrong. The main lesson for you, then, is to use Elliott wave counts to help in your trading, not to verify if you are right or wrong in hindsight. Good luck
Thanks for sharing your count.
With the personality of waves in mind (as learnt from your book), I am uncomfortable with ‘b’ of 4 in your counts. Can you please write more about it and also share from your experience, how to spot such a ‘B’ early?
Sriram, as explained in FWTFF, the principle of alternation is a valuable guide in anticipating an irregular correction. But today’s moves have sort of confirmed that the count shown is probably not the best fit. I had warned several times that there are other counts possible, and the trader needs to be aware of these as well.
Very well explained Sir. Its very challenging to count the wave when its developing. After completion of one leg, many wave count id possible. In your example wave 4 very challenging. But sometime, very less possible count works very well. Thanks again. I respect you Sir.
Yogi, the wave 4 shown in this illustration is not definitive! There are other counts too. Choosing the one that has the best chances of working and knowing when to commit real money is the more important challenge. This comes with practice. All the best.
Good Morning dear Ramki. According to the above chart as you have explained Nifty was resisting at 6220 for the last couple of days which is 61.8% projection of wave 5. Today it has broken that resistance and gave a high of 6252. As per the rules of EWP and also your book FWTFF the next target of wave 5 should come at 100% projection at 6540 since in the above chart wave 3 was 123.6%( ) of wave 1 and hence wave 5 should extend >61.8% if I am not wrong.
Thanks and regards.
Dr Sanjay, there are many different counts that are possible. I have shown only one in the blog. Also, breaking above yesterday’s high is not always a signal of an extension, as you would have realized from the articles on the membership page.
I feel that EWA & trading is like toss of coin with a risk-reward ratio; If I get Head I win 10 pts and if I get Tail I restrict my loss(stop loss) to 5 pts. So out of 10 moves if I am correct more than 3 times I am at profit.
Earlier we were looking for 4300 nifty and now we are near all time high. At this point also there are many possibilities for our work in progress weather we have completed 5 wave or might reach 6400, weather the count shown possibly best fit or not etc……. so we assume that our analysis is correct and toss the coin if correct will get 10 pts otherwise have to restrict the loss to say 5 pts. That’s all.
So in this dynamic market there can’t be any fixed set of rules and making money is very difficult and that is the reason why, most of the analysts are selling their advises, books, memberships, tips etc…
Anyway I will request you to reply to this post so that you can guide your readers against the above thought.
Piyush Goyal, Thanks for asking a very good question. If I could determine using Elliott Waves a level that has a high probability of success, isn’t that a better deal than just tossing a coin at any level and deciding to buy or sell? As for 4300 vs our being near the highs, there is a difference between having a broad overview, and actually moving in to sell. While it is true that trading always involves taking a chance, we are trying to improve our chances for success. As for your final observation regarding analysts selling their advice, books, newsletters, membership, tips etc, Alas, it is true that there are many charlatans in that tribe. But I can speak for myself. My book sells for less than $10, and most people believe it is worth a lot more. My blog is for free and I have spent countless hours on it. And my exclusive club clearly states membership is not for everyone. A highly skilled lawyer, or surgeon would charge much more for an equivalent amount of time, and by that standard, my service is under-priced. I hope I have covered all your points, Piyush. I value honest questions from my readers because I am one of you. Wavetimes exists because I want to help you all learn from my experiences. In this blog, I have made no attempt to cover up any calls that went wrong. Put simply, I practice what I learnt and publish what I believe to be my best reading at that time. However, be aware that trading a view goes one step above the analysis, and this skill comes with experience. good luck.
Thanks a lot for clearing the doubt of Piyush, that’s keeping me alive in market
Very well said Sir
thx sir for reply and clearing the doubts, you have tremendous clarity in thought process when marking elliott, , thx thx thx
If you have a look at weekly charts of Nifty,by any means, do you think Nifty is taking shape of Leading Diagonal Triangle?
HAS THE BSE-FMCG INDEX COMPLETED IT’S 5 WAVE UP SINCE 2000!
Waiting for your valuable reply.
PIYUSH G MANDALIA
As stated by you, In the bigger picture Wave C was 61.8% of wave A.Post this point ,Nifty has been moving in an Impulsive Wave.Can we call this starting point as start of new Impulsive Wave 1?The only confusion is that this point is not any significant low.
Kindly can you throw some light here please.
I bought ur book and as per ur equality the taget for 5th wave comes as 6339. now correction unfolds.I regret that I had not bought ur book at the earlier.
Vishwanathan, That’s the power of Elliott Waves. Dont worry..there are lots of other good trades around. By the way, members of our Exclusive Club got to see above 6330.
Kindly can you post latest/updated daily chart for Nifty please which will provide some direction as where is Nifty headed in coming months.We have not seen any significant lows in India markets so the question is are we going to see much lower levels or new Impulsive Phase has already started.Will appreciate if you can take out same time and provide some insights for Nifty followers.
Can you tell me Nifty Elliot wave Count is Correct ? In weekly chart 4th wave overlaps Wave 1 But in Monthly Closing basis Wave 4 never overlaps Wave 1
Thirushakar, The way I look at Elliott Waves, there should not be an overlap of wave 4 over wave 1 even in intra-day basis (except in certain special occasions).
SIR ,could u plz tell about those special occassions?
Abhishek, One example is inside a diagonal triangle..suggest you read about this in a good Elliott Wave book.
In case of Chanelling,can we have Wave4 overlap Wave1?
Prabh, Channeling has got nothing to do with overlap. The overlap of wave1 by wave4 is not allowed is any normal impulse wave, period. However, when you draw a channel, it might cut through some price action, and this is how Elliott Wave channel is different from the classic pattern
We know that you are at business and always concerned about business,you have not created this website to do social service.
Despite that people think of asking you the trend about markets which you also cant predict.You recently told even Elliott wave also doesn’t guaranty any profits. Then why should one follow it. I even know you will not post this message in you website but I never care. I just want to tell you , you are also one of black crow in the market which Mr sethi use to tell
All crows are black
Hello Sailesh, Thank you very much for your comments, which I have no hesitation in publishing. Let me take your observations one at a time. I consider that I have a hobby that has business potential. I charge for my time, effort and skill and clients who subscribe know what they are paying for. I also do social service; this blog has taken countless hours of my spare time, and is completely free, honest and definitely useful for those who are interested in pursuing a technical approach to trading and investing. As to why someone should consider it useful to follow when it doesn’t guarantee a profit, one can only repeat the cliche that the only things that are guaranteed in life are death and taxes! But seriously, having a consistent method to trading is your only hope to survive in the markets for a long period of time. What’s more, I have worked with some of the most successful traders who employ my methods, and some of us have been employed by likes of George Soros. I dont know who Mr. Sethi is, but he is certainly entitled to his opinion! Once again, thanks for writing.
I am trading nifty for the last 15 years and following your website for last 1 year. I respect you for your knowledge and professionalism and follow you very closely.
As per my chart reading of nifty, it is exhibiting ascending triangle formation in the longer time frame charts. Triangle wave formations has wave A to Wave E and wave F commence with break out of higher range. As Wave D over at 6342 and wave E assumed to be in progress.
Are my current nifty counts correct.
Jagadeesh, Couple of points (a) One can be sure of a wave count only after the fact, While it is evolving, you need to mark its position and personality to determine the odds that your count is correct (b) Triangles occur in corrections. But leading and ending diagonal triangles occur at waves 1 or A and Waves 5 or C respectively. I am not sure what your ascending triangle refers to. With these clues, and what you have read in FWTFF book, you can decide the best course of action for your trades. Good luck
nice & a polite reply!
The chart u explained above was invalidated wen nifty hit a new high the next day but do u think it was just a matter of levels n Nifty completed its 5wave rally at 6342 an den a A wave from there to 5970 n Now is in a b wave ??could u plz post the latest count for nifty
Abhishek, When it comes to trading the waves, one has to be flexible and move with the market. In fact I made it clear at that time that this was but ONE of the possible counts. Just to let you know that there was a trade idea that was discussed with the exclusive club members all the way to the top. I will be able to post those charts only after some more days.
Dear RAMKI, thank u for spending ur valuble time to ur followers to explain EWT .As per u a flat.138.2 projection comes @6304 &wave5 within C target of 0 to 3 of 61.8 comes at 6308.am i right or not? thank u.
Viswanathan, After you have read FWTFF, I would like you to focus more on the ‘how’ to trade the markets rather than what the old wave counts were. You see, my approach to the markets is to use the waves to identify low-risk entry levels and the next direction. Once I capture a move, I am free to change my counts. The targets also change…
Dear Sir., I am new in elliot wave count., Let me know how to find the wave using chart
Jeevan, I suggest that you buy a good book on Elliott Waves and read it carefully. All the best
i was following u since last friday 6th of dec i have gone through all your blogs i found really gem out of it
i do not know what will be in your book which i am going to purchase this comming week. if my wave count is correct of nifty in diagonal triangle at the end of wave “e” what can be the target if wave e ends at 6415 how to messure the target which i could not find in any of your blog i read of snp500 blog of 2008 but could not get or understood it.
Prakash, I would strongly recommend that you read a good book to understand all the nuances of Elliott Waves. Don’t worry about the target for Nifty before you complete your understanding of the waves!!
Looking to above chart and current scenario, what look simple & clear to my eyes is that we have completed the wave 5 at 6343, wave A at 5970, wave B at 6415 and are now in wave C which may target to around 5700. which may also be double top target.
I don’t know weather it fits or not with EW rules but it seems to me the best possibility. Your guidance or readers’ comments may help me.
I am having a query on ‘leading diagonal triangle’ which can appear in Wave1 of impusive wave or Wave A in correction.
According to EW principles,Is it mandatory to have presence of any extended wave in ‘leading diagonal triangle’?If there does not exists any extended wave but Wave 3 is still not the smallest wave will the wave still be qualified as ‘leading diagonal triangle’?
Have a look at attach image for Nifty Index.Does it appear to be valid ‘leading diagonal triangle’?Internal waves can be tweaked to make out one of the internal waves as extended but is that one of the requirment for Wave to be qualified for ‘leading diagonal triangle’.
Prabh, (1) The presence of an extension in an impulse wave is only a tendency and not a rule.(2) In a leading diagonal triangle, if the lines are converging, wave 3 will be smaller than wave 1, but wave 5 will be smaller than wave 3 because of the way the two lines are converging. (3) You should never ‘tweak’ any wave to suit your convenience. It is hard enough to figure out the correct counts without having to make such adjustments and (4) you need to revisit my book, and also go through many of the examples of diagonal triangles in this blog because your way of drawing it does not appeal to me.
Sir it’s been a long time without any update on nifty. if you get time please do so.
in the meanwhile can you please tell me if unitech has done its abc correction from 2008 peak and has started a new wave 1 up
Akhil, As you know I dont offer trading advice here. BUt UNitech looks like it has posted a significant low in March 2014
With all the enthusiasm in the Indian markets reaching optimism levels after stable govt, just wondering if you have able to throw your magnifying glass on Indian indices and analyze where we are. I am little confused if recent swift move was part of some impending complex correction or is this the power of 3rd of 3rd wave of primary wave 3 since 2008 lows. Appreciate your time and insight if you could.
Hi Sunny, Thanks for writing. I am unable to post that now because there are members in my exclusive club who are paying for the same, and it is not fair to them to share it on the blog.
want to learn Elliot wave labeling from you . thanks
Rajan, I recommend FWTFF as a first step. Then the DGI book! All the best