Trading Elliott wave – Neo wave: Big Trend to Emerge Soon!

banknifty elliott wave neowave nifty trading Apr 24, 2024

Trading Options using Elliott wave – Neo wave is one of the powerful methods in technical analysis.

Nifty has been moving in lacklustre fashion over the past many months but with high volatility within the range.

During such times it is important to understand the maturity of trend by looking at Elliott wave or GPS of the market.

Nifty hourly chart:

As shown in above chart, prices after forming a low near 18770 has been moving up in form of complex corrective pattern involving wave x. Currently, 3rd standard correction is ongoing which seems to be forming Diametric pattern.

Diametric is a 7-legged pattern which does not have stringent rules but just guidelines. There is a possibility that the high made at 22775 might remain protected and prices can reverse back on downside after the ongoing pullback is over. Currently, prices have retraced nearly 61.8% of the prior fall.

Price action by way of closing below prior day’s low will be first sign of reversal which if combined by a 2-stage confirmation technique as per Neo wave will indicate down move is resuming.

On upside 22550 is major hurdle and a deeper pullback above this will suggest the alternative counts shown above wherein wave g is ongoing. This will only delay the imminent reversal on downside by few more days or weeks but the trend on upside is in matured stages.

In a nutshell, Nifty is trading at the cusp or inflexion zone. Move above 22550 will extend this rally to lifetime highs whereas any break below 22200 will confirm reversal to below 21700 or lower.

Thus by combining Neo wave with price action, one can form a strong trading strategy that can provide a high conviction trade setup. Especially if one can combine the Options strategy along with the given levels trading can take a different leap altogether.

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