This analysis looks at the higher-degree structure of the Nifty Bank Index on the daily timeframe. By combining Elliott Wave theory with the 50-day moving average (DMA), we can establish a clean, rule-based framework for the current market trend.
1. The Macro Pattern: An Elongated Running Flat
The multi-month correction from the Wave 3 peak tracks perfectly as a 3-wave (A-B-C) Running Flat structure. This pattern typically signals strong underlying demand, as the market refuses to correct deeply.
2. Trend Confirmation via the 50-DMA
The 50-day moving average provides excellent objective validation for this wave count:
3. The Present Position: Inception of Wave 5
With the major Wave 4 correction finalized at 49,954.85, the index is now in the early stages of a new higher-degree upward impulse (Wave 5). We can break down the current daily price action into smaller sub-waves:
The recent daily price expansion has successfully reclaimed the 50-DMA. This confluence, a successful test of the 0.618 retracement followed by a breakout back above the moving average, strongly indicates that Wave (ii) has concluded and Wave (iii) is beginning to develop.
4. Trade plan and Invalidation
This structural layout provides clear boundaries to manage risk and monitor the progress of the trend.
Invalidation Level (Stop Loss): 49,954.85. This is the absolute line in the sand. According to Elliott Wave rules, a second wave cannot retrace more than 100% of the first wave. A daily close below this level invalidates the current bullish structure.
Immediate Target scraps: A daily close above the Wave (i) high at 57,456.30 will confirm structural acceleration.
Macro Target: Once the immediate resistance is cleared, the structural projection points toward and stretches beyond the previous highs at 61764.85 for Wave 5.
Disclaimer: This analysis is for educational purposes only and does not constitute investment advice. Please do your own research before making any trading decisions.
1. The Macro Pattern: An Elongated Running Flat
The multi-month correction from the Wave 3 peak tracks perfectly as a 3-wave (A-B-C) Running Flat structure. This pattern typically signals strong underlying demand, as the market refuses to correct deeply.
- Wave A: The initial decline moved down to find a floor at 47,702.90.
- Wave B (The Extension): The subsequent recovery carried the index to a new high of 61,764.85. Standard Elliott Wave guidelines suggest that Wave B usually terminates between 123% and 161.8% of Wave A. In this case, high momentum caused Wave B to extend to 208% of Wave A. While an extension of this size is uncommon, the internal sub-waves clearly confirm it as a 3-wave corrective structure rather than a new impulse.
- Wave C: Following the Wave B peak, the index experienced a sharp 5-wave decline (i)-(ii)-(iii)-(iv)-(v) down to 49,954.85. Because this 5-wave drop found support well above the Wave A low, the pattern is confirmed as a completed Running Flat for major Wave 4.
2. Trend Confirmation via the 50-DMA
The 50-day moving average provides excellent objective validation for this wave count:
- During the Wave B advance, the 50-DMA acted as a steady dynamic floor.
- During the Wave C decline, the price broke below the moving average, which then flipped to act as overhead resistance during minor corrective bounces.
3. The Present Position: Inception of Wave 5
With the major Wave 4 correction finalized at 49,954.85, the index is now in the early stages of a new higher-degree upward impulse (Wave 5). We can break down the current daily price action into smaller sub-waves:
- Wave (i): The initial impulsive bounce peaked at 57,456.30.
- Wave (ii): The market then underwent a brief, 3-wave pullback that found support exactly at the 0.618 Fibonacci retracement level (52,820.40).
The recent daily price expansion has successfully reclaimed the 50-DMA. This confluence, a successful test of the 0.618 retracement followed by a breakout back above the moving average, strongly indicates that Wave (ii) has concluded and Wave (iii) is beginning to develop.
4. Trade plan and Invalidation
This structural layout provides clear boundaries to manage risk and monitor the progress of the trend.
Invalidation Level (Stop Loss): 49,954.85. This is the absolute line in the sand. According to Elliott Wave rules, a second wave cannot retrace more than 100% of the first wave. A daily close below this level invalidates the current bullish structure.
Immediate Target scraps: A daily close above the Wave (i) high at 57,456.30 will confirm structural acceleration.
Macro Target: Once the immediate resistance is cleared, the structural projection points toward and stretches beyond the previous highs at 61764.85 for Wave 5.
Disclaimer: This analysis is for educational purposes only and does not constitute investment advice. Please do your own research before making any trading decisions.
WaveXplorer | Elliott Wave insights
📊 X profile: @veerappa89
📊 X profile: @veerappa89
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
WaveXplorer | Elliott Wave insights
📊 X profile: @veerappa89
📊 X profile: @veerappa89
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.