Elliott Wave Analysis on Nifty 50

Elliott Wave Analysis on Nifty 50: Historical Setup

ByCharles Baker

The Nifty 50, India’s benchmark index, has experienced several clean Elliott Wave formations over the years—especially during major bull and bear phases. By applying Elliott Wave Theory to historical Nifty price action, traders can gain insight into how crowd psychology drives Indian markets.

In this case study, we’ll analyze a notable Elliott Wave setup on the Nifty 50 to highlight key wave patterns and tradeable signals.

Overview of the Market Phase

Let’s examine Nifty’s movement during the 2020–2022 market cycle:

  • March 2020: Covid crash — major low around 7,500
  • October 2021: All-time high near 18,600
  • 2022: Sharp correction phase

This entire cycle produced a textbook Elliott Wave formation.

Wave Count Breakdown

Impulse Phase (March 2020 to Oct 2021)

  • Wave 1: 7,500 to 10,200 – Initial recovery
  • Wave 2: Retracement to ~8,800 – Shallow correction
  • Wave 3: Rally to 15,400 – Strong momentum, highest volume
  • Wave 4: Consolidation near 14,100 – Sideways movement
  • Wave 5: Final push to 18,600 – Divergence on RSI visible

Observation: Wave 3 showed the cleanest impulse with volume confirmation, a common trait in Indian indices.

Corrective Phase (Late 2021 to 2022)

After the peak at 18,600:

  • Wave A: Drop to 16,400
  • Wave B: Rally back to 17,800
  • Wave C: Fall to 15,200

This ABC correction completed the full cycle from the 2020 bottom, setting up for a potential new bullish impulse.

Tools Used in This Analysis

  • TradingView: For wave plotting
  • Fibonacci Retracement: Used to confirm Wave 2 and Wave 4
  • RSI/MACD: Confirmed divergence in Wave 5
  • Volume Profile: Verified strength during Wave 3

Lessons from the Nifty Wave Cycle

  • Wave 3 delivered the best trading opportunity
  • Corrections respected Fibonacci levels—Wave 2 near 50%, Wave 4 around 38.2%
  • Volume and momentum supported the wave count
  • ABC corrections can take time—patience is key

How to Apply This Today

If Nifty begins forming a new impulse:

  • Look for confirmation of Wave 1 and 2 on the current chart
  • Use previous structures as reference points
  • Watch momentum indicators for clues about Wave 3 development

Conclusion

This Elliott Wave analysis on the Nifty 50 illustrates how predictable market psychology can become when viewed through wave theory. By studying past cycles and wave behavior, Indian traders can gain an edge in forecasting future movements and planning high-probability trades.

FAQs

Can Elliott Wave be applied to Indian indices?
Yes, Nifty and Sensex often show clean wave patterns due to strong retail and institutional behavior.

Was the 2020–2022 move a textbook Elliott Wave cycle?
Largely yes. It followed a clear 5-wave impulse and 3-wave correction.

Which wave is most profitable to trade?
Wave 3 typically shows the strongest trend and highest momentum.

Do Indian stocks also follow Elliott Wave?
Yes, especially large-cap stocks and sector indices.

Where can I see live Elliott Wave counts for Nifty?
Platforms like TradingView or MotiveWave allow you to label waves manually or use shared ideas from other traders.