Angel One - Can we identify the Bottom?

Let's examine a couple of fundamental principles in technical analysis related to price action and Elliot waves.

1) One of the basic rules of Elliot waves states that wave 4 should not overlap with the territory of wave 1.
2) It is understood that when a price breaks through a resistance zone and subsequently retraces to test that level, it transforms into a support zone or demand zone.
3) According to Elliot waves, any correction typically follows an ABC pattern and concludes near specific Fibonacci levels or support levels.

Observing Angel One at this point, we can observe all the aforementioned rules may come into effect. Initially, the price broke above the 2000 levels in October 2023, and after completing the 3rd wave, it has retraced to test the 2000 levels. An ABC pattern is clearly visible after the 3rd wave, with wave C having extended 78.6% of wave A, and the minor wave 5 of wave C extending to the 50-61.8% range, aligning with the general criteria of Fibonacci rules in Elliot waves

By combining all the pieces mentioned above, it can be inferred that we are approaching the conclusion of wave 4, and a rally for the 5th wave may be anticipated from this point onward. It will be a excellent risk to reward play if it performs as per our analysis. These are the kind of trades where i prefer risk reward over accuracy

How should we approach trading this situation?
Conservative approach: It is advisable to monitor the price to ensure it does not decline further and breach the territory of wave 1. Additionally, watch out for bullish candlestick patterns such as the morning star or bullish engulfing patterns to build any positions

Aggressive approach: One can consider initiating testing of the price action with an initial 10% position, with a stop-loss set below the low of the wave 1 trendline. If the price demonstrates bullish momentum, positions can be added around the 2300 and 2600 levels, targeting approximately 3800.

All the relevant levels are indicated on the chart. I will provide updates on any future developments.

Disclaimer: Please note that the information presented in this analysis is intended for educational purposes only. It is highly recommended to seek advice from a financial advisor before making any investment decisions. I cannot be held accountable for any financial losses that may arise