close icon

Nifty 50 Bulls Unable to Stop the Bleeding

We published our last update on the Indian Nifty 50 almost four months ago, on June 6th, when the benchmark index was hovering around 10 550. Despite the recent selloff from 11 172 to 9 952, the Elliott Wave outlook was still positive. With the help of the chart below, we concluded the index is still headed north and “the bulls should eventually be able to reach a new all-time high between 11 200 and 12 000.
nifty 50 index elliott wave analysis
Our optimism derived from the fact that trends develop in repetitive patterns, called waves. Since Nifty 50 was still in an uptrend, a five-wave pattern known as an “impulse” was supposed to emerge from the bottom at 6826 in February 2016. As visible, wave (4) had bounced up exactly from the 38.2% Fibonacci level and wave(5) was still missing. A new all-time high had to occur, in order to complete the pattern.

On the other hand, the theory states that every impulse is followed by a three-wave pullback in the opposite direction. So instead of joining the bulls when wave (5) exceeded the top of wave (3), traders would be better off staying aside in anticipation of a bearish reversal.

Nifty 50 Elliott Wave Update

Nifty 50 climbed to a new record high of 11 760 on August 28th. Less than a month later, on September 21st, it fell to an intraday low of 10 866. The bearish reversal the Wave principle warned us about nearly four months ago is one month in the past now. The updated chart below visualizes how things have been going.
nifty 50 Indian stock market index Elliott wave analysis
Actually, wave (4) was not over at 9 952. Instead, it developed as an a-b-c-d-e triangle correction, without changing the overall outlook in any material way.

As of this writing, Nifty 50 is trading slightly above the 11 000 mark. The price is now knocking on the support line drawn through the lows of waves (2) and (4), and if this count is correct, it has a good chance of breaching it. We believe the bears should at least be able to drag the index down to the termination level of wave “a” of (4). In terms of price, this means a decline to under 10 000 is on the cards. It looks like it is too early to buy the dip as the Nifty 50 is poised to lose another 1000 points from current levels.

Did you like this analysis? Learn to do it yourself with our Elliott Wave Video Course!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

S&P 500: Last Four Moves Made Elliott Wave Sense

Over a month ago, on November 8th, we published an article demonstrating the Elliott Wave principle‘s ability to predict relatively large moves in the S&P 500. As the move in question progressed we decided to take a closer look into its structure to see what is left of it. The chart below was part of…

Read More »

Nikkei 225 Can Lose 30% in Next Corrective Wave

The Japanese Nikkei 225 reached a multi-year high of 24 448 in October 2018. The last time the index traded this high was 27 years ago, in 1991, in the aftermath of the Japanese asset bubble. However, the bulls couldn’t maintain their momentum last year, which opened the door for a decline to 18 949…

Read More »

S&P 500: Triangle Pattern Leads to New Record High

The S&P 500 reached new all-time highs on the back of better-than-feared earnings season and improved US-China trade prospects. The index closed at 3085 Thursday, bringing its 2019 tally to the impressive 23.1%. But was there a way to predict this move instead of just explaining it after the fact? To paraphrase Warren Buffett, the…

Read More »

Insurance ETF Poised for an Elliott Wave Correction

The SPDR Insurance ETF reached a new all-time high in September, helped by a solid job market, increasing wages and rising consumer confidence. The price is up 630% since the Financial Crisis low at $4.77 in March 2009. The question is, can investors trust the uptrend to continue? Regardless of what pundits say, we don’t…

Read More »

Dow Jones Sends a Warning Investors Can’t Ignore

The price movements of financial instruments form repetitive patterns, called Elliott waves. Experienced analysts try to recognize those patterns in order to prepare for the next market move. Sometimes, a pattern can indicate not only one, but the next two consecutive moves. The triangle pattern, for instance, is known to precede the last wave of…

Read More »

DAX 30 Adds to Global Recession Fears

The German DAX 30 index has been declining since early July when it reached 12 656. Last week’s news that the German economy shrank by 0.1% in the second quarter only added to global recession fears. The benchmark index of Europe’s largest economy fell to 11 266 on August 15th. Are investors’ concerns warranted? Or…

Read More »

Dare to Guess the Best Stock Market Index of 2019?

The first half of 2019 saw stock market indices around the globe rebound sharply. In the U.S., NASDAQ, DJIA and the S&P 500 are up 22.7%, 14.8% and 18.9% since the start of the year, respectively. In Europe, the German DAX and France’s CAC 40 both climbed 17.8%, UK’s FTSE 100 surged by 12% and…

Read More »

More analyses