Nifty Elliott Wave Analysis

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 Nifty daily chart


Nifty 2 hour chart


Nifty Open Interest 18th May 2023


Analysis

In my previous update I had clearly mentioned that Nifty will change the trend from positive to negative once the level of 17970-17950 zone is broken on the downside. However, the index continues to move higher with the trend and made a new high instead. 

As seen in the above daily chart, prices are currently moving in a higher highs and higher lows by precisely taking support of the rising red trend line. As far as the index is above the red trend line the bias remains positive. It is only the break of the trend line which will open negative possibilities and possibly resume the downtrend. To support the view it is very clear that RSI is in overbought terrain and it has made an attempt to relieve from the zone thereby exhibiting negative divergence.

From 2 hour chart, prices are currently consolidating and it seems that next week it is expected to be in a tight range of 18300-18200 levels where most of the option sellers are active as seen in the above chart. The level of 18200 also happens to be the support of the red trend line. So if this support breaks than there can be long unwinding which can eventually add pressure in the index.

Along with that the index is far away from the mean which is placed at 18000 levels in the daily chart. It is likely that once the level of 18200 is broken, the index can plunge towards 18000 levels over short term.

As per Elliott Wave theory, prices are currently moving in wave c of wave b in which it is moving in wave v of wave v where there is a high possibility of an ending diagonal. As of now it is early to conclude but even if it is formed it will be at much faster pace.

The summation is Nifty needs to break 18200 for negative possibilities to open which can drag the index towards 18000 levels over short term.

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