Bank Nifty Elliott Wave & Squeeze Setup Analysis: Wave 5 on the Horizon?

In this detailed analysis, we will examine Bank Nifty’s current structure through the lens of Elliott Wave Theory, followed by a look into the Squeeze Setup—a reliable tool for identifying periods of consolidation and explosive moves. The combination of both frameworks gives us a high-probability roadmap of what may lie ahead.

Elliott Wave Analysis: Structure Suggests Strength

As per the current wave count, Bank Nifty appears to be in Wave 4 correctiong. Let's walk through the wave labelling and the Fibonacci relationships that support this analysis:

🔹 Wave 2

• Wave 2 was sharp and deep, retracing between 61.8% and 78.6% of Wave 1.

• This fits the guideline that when Wave 2 is deep and sharp, Wave 4 is typically shallow and complex—which is exactly what we're seeing.

  

  🔹 Wave 3

• Wave 3 extended approximately 150% of Wave 1, slightly short of the ideal 161.8%–172% range often seen in strong trends.

• Nevertheless, the momentum and price expansion qualify it as a clear impulsive move.

  

  🔹 Wave 4: Triangle Formation

• Currently, Wave 4 retracement is shallow, holding around the 38.2% retracement level of Wave 3.

• More importantly, Wave 4 is unfolding as a Triangle, which is very much in line with Elliott Wave guidelines, as triangles commonly appear in Wave 4 or Wave B positions.

  

  

🔹 Wave 5: Targets & Outlook

Given the Fibonacci projections and wave structure, Wave 5 is now likely to unfold. Based on projections:

• Minimum target for Wave 5 is around 56,959

• If Wave 5 extends, which is possible since Wave 3 did not fully reach the 161.8% projection, we could potentially see levels of:

  • 57,900

  • Even up to 58,844

    

    🔻 Invalidation Level:

  • If the index breaks below 53,908, the current wave count will need to be reconsidered.

Squeeze Setup: Ready to Explode Higher?

Now let’s complement our wave analysis with insights from the Squeeze Setup.

🔸 Daily Squeeze: Mid to Low Compression

• The index had entered a mid-compression squeeze on the daily timeframe.

• Recently, this has transitioned to a low-compression squeeze, indicated by the red dots turning orange—a classic sign that the squeeze is maturing and ready to fire.

  

  🔸 Stacked EMA & Momentum: Confirming Strength

• One of the key indicators of squeeze quality is the Stacked EMA structure.

• Bank Nifty is currently trading above all major EMAs, and these averages are positively stacked—a strong confirmation of underlying trend strength.

• Also 12 period momentum is above Zero line indicating positive momentum.

🔸 Implication

• When a low-compression squeeze develops within a strong trend, it often results in an explosive breakout in the direction of the trend.

• In this case, the bias is clearly bullish, increasing the odds of a breakout aligning with Wave 5.

Conclusion: A Strong Confluence of Signals

The confluence of Elliott Wave and Squeeze Setup paints a compelling picture:

✅ Wave 4 is nearing completion within a triangle formation
✅ Fibonacci relationships align perfectly with textbook Wave Principle guidelines
✅ Squeeze setup shows a coiled market with stacked momentum
✅ Targets suggest room for significant upside in Wave 5
✅ The only key caution is the invalidation level at 53,908

✨ Final Word

All signs point toward a potential breakout in Bank Nifty, with the wave count and squeeze compression both indicating strong upside probability. Traders and investors should watch for a breakout confirmation and manage risk around the invalidation level.

As always, let the structure lead the strategy—and the charts guide the conviction.

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