Here some basic knowledge of Elliott Wave Theory can be handy for investors.The wave theory is very exhaustive and at times debatable .Also many times a wave count can be different from other elliott wave followers.We should know that in a trending market wave structure is very definitive.As per one of the rules elliott waves a structure of five waves is formed in direction of the market which is down currently and three waves in countertrend or reactions.Hence we can count here five waves on the chart.Also the third wave is normally more powerful, devastating with good momentum.The completed structure of the wave pattern depicts that a temporary bottom has been formed on the nifty on daily price chart.The same principle can be used on hourly charts by traders for short term and intraday to master their trades.In this upmove first a three wave structure will be formed.The first wave is in progress after which we may get a dip and up for third wave.So it is advisable to buy on a dip as and when it occurs on nifty.For nifty to make a significant bottom this three wave structure should evolve to a five wave structure which will mark a major change in trend.So lets watch how the wave structure develops further on the nifty.
Happy Trading!
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