Bounce will struggle to sustain, Nifty to witness some price consolidation
Date: 25^th March 2013

I wrote last week that a tick of 5775 would be very dangerous signal for bulls. It proved indeed. Prices collapsed and saw levels around 5630.

The overall picture is very bearish for reasons explained in last week write up. Have a look at 10 boxes Point and Figure charts of Nifty pasted below. 10 box close only chart (Figure 1) achieved the target activated during last week only. A down side count is open but price is near important support levels. It shall respect the support levels atleast for a while.

10 box High low chart (Figure 2) suggests that a top is been formed with multiple anchor point resistance levels that makes it a strong supply area for any upside move from here. Price is near 45 degree trend and anchor point support levels which can stall the fall but overall formation has turned out to be very bearish due to multiple bearish formations in the set up.

Various momentum indicators in bar charts are signaling positive divergences and around 90% of Nifty components are trading below their 10 day moving average. It is signals that trend is reaching the stage of exhaustion and it may need some space to breath. And so I expect some consolidation.

Bounce from current levels cannot be ruled out but I suspect the sustenance. Immediate resistance is around 5740 – 5760 levels. I expect first bounce to be little weaker and I prefer trading double top buy signal in such cases. That assures me a formation of base before buying.

From trading point of view, wait for price to consolidate before buying. Nifty is expected to remain between 5760 and 5640.

For those who trade P&F charts, wait for formation of higher ‘O’ from here and then buy when column of X forms. That would provide you affordable buying opportunity.

Else, prefer to enjoy the truncated week. Wish you all a very Happy Holi.

     Figure 1: Nifty 10 x 3 Cl Point and Figure Chart

     Figure 2: Nifty 10 x 3 HL Point and Figure Chart

-         -          Prashant Shah

Disclaimer:
All information provided above is for general information purposes only and does not constitute any investment advice. Company or Author shall not be liable for loss or damage that may arise from use of information provided above. The report is purely for information purposes and does not construe to be investment recommendation/advice or an offer or solicitation of an offer to buy/sell any securities. The opinions expressed are current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Investors should not solely rely on the information contained in this document and must make investment decisions based on their own investment objectives, risk profile and financial position. The readers of this material should take their own professional advice before acting on this information.

Bears will regain control below 5800!! A tick of 5775 will open doors for 5600.

 Date: 18^th March 2013

Last week view has worked well and Nifty witnessed a fall from 5970. As expected, it respected the resistance line and then didn’t close below 5840 to bounce back again.

I have plenty of charts to paste for your observation in this week write up. Figure 1 is 10 box High low chart of Nifty. Opposing Pole pattern has formed and low below 5800 would make this chart look really negative. A downside vertical count will be activated as well.

10 box close only chart (Figure 2) is yet to see opposing pole pattern but it will be formed if it closes below 5800. Opposing pole is bearish pattern and indicates weakness in recent upside rally. Figure 3 is 0.50% x 3 High low chart of Nifty to analyse the larger and compressed picture of 3 box price trend. This horizontal top formation at levels around 5950 has made that top very important resistance level for any upside rally from here. The support at the moment exist around 5780 – 5800 levels. As shown in the chart, the picture will look bad if Nifty will see a tick at 5775 during this week.

Figure 4 and 5 is Fib cluster levels of Nifty daily charts. I keep checking clustered levels of retracement and extensions from important tops and bottoms. Extension from corrective move A shown in Figure 4 has achieved it course. Figure 5 suggests that 5900 – 5950 is important resistance zone for Nifty from here and support lies around 5780 – 5800 levels.

The price structure observation through various charts are pointing towards 5780 -5800 levels for supports and 5920 – 5950 for resistance.

From trading point of view, Sell around 5900 - 5920 if price rallies from here. New upside count will be activated above 5960 and fresh longs should be taken only if that happens. Bears will regain control below 5800.  A tick of 5775 will open doors for 5600. Shorts to be initiated with stoploss placed at 5840 on closing basis if that happens.

     Figure 1: Nifty 10 x 3 HL Point and Figure Chart

    Figure 2: Nifty 10 x 3 Cl Point and Figure Chart

    Figure 3: Nifty 0.50% x 3 HL Point and Figure Chart

    Figure 4: Daily candlestick chart of Nifty

    Figure 5: Daily candlestick chart of Nifty

-          - Prashant Shah

Disclaimer:
All information provided above is for general information purposes only and does not constitute any investment advice. Company or Author shall not be liable for loss or damage that may arise from use of information provided above. The report is purely for information purposes and does not construe to be investment recommendation/advice or an offer or solicitation of an offer to buy/sell any securities. The opinions expressed are current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Investors should not solely rely on the information contained in this document and must make investment decisions based on their own investment objectives, risk profile and financial position. The readers of this material should take their own professional advice before acting on this information.

Bet for follow through!! Buy dips!

 Date: 11^th March 2013

Such a dramatic rally!! I would have stopped watching movies for entertainment had my positions were not always open in the stocks. I mentioned about expected short term bounce in last week write up. Nifty bounced in style from support levels to form Bullish Engulfing candle in weekly charts.

What’s next? We chartist and analysts become bearish when prices go down and bullish when they start going up. We are taught to listen to price and not to become rigid while forming views and opinions. But this flexibility while doing analysis is not adoptable in trading. I have read many tweets of well known analysts recently while budget speech is going on. I wonder if they would ever be able to trade such flexible approaches!! I don’t know what happened to listeners!!

I believe one should do analysis sufficient to form tradable views unless his business is to provide ‘Tips’!! Over thinking and over analysis will always result in over trading.

Coming to the point, 10 box Point and Figure charts of Nifty are shown below in Figure 1 and 2. I mentioned last week that Low Pole bullish pattern will be formed above 5820. It is formed in both the 10 box charts. This is bullish news and indicating strong comeback by bulls. But should I buy here then? Charts have become bullish but fresh Long trade is not affordable from here. Price horizontal resistance line in close only chart (Figure 1), Anchor point and Internal line resistance area in High low charts (Figure 2) suggests that prices have reached their important point of resistance. 5940 – 5970 is the area of strong resistance and I expect prices to respect these levels atleast initially.

5860 – 5880 seem importance support being previous resistance area. Opposing Poles will be formed if price goes below 5810. This will indicate reassertion of control from bears.

From trading point of view, bullish pattern and Count Direction (6020 in shown in Figure 2) is indicating upward trend so one shouldn’t go short now unless pattern is negated. Wait for some price consolidation or correction that can give affordable trading opportunity. Buy close to 5860 – 5880 area and don’t remain long if it closed below 5840.

     Figure 1: Nifty 10 x 3 Cl Point and Figure Chart

    Figure 2: Nifty 10 x 3 HL Point and Figure Chart

-          - Prashant Shah

Disclaimer:
All information provided above is for general information purposes only and does not constitute any investment advice. Company or Author shall not be liable for loss or damage that may arise from use of information provided above. The report is purely for information purposes and does not construe to be investment recommendation/advice or an offer or solicitation of an offer to buy/sell any securities. The opinions expressed are current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Investors should not solely rely on the information contained in this document and must make investment decisions based on their own investment objectives, risk profile and financial position. The readers of this material should take their own professional advice before acting on this information.

This week seems set for some price consolidation! Short term bounce from 5630 – 5650 likely!!

 Date: 3^rd March 2013

As said last week, Nifty cracked below 5800. Have a look at 10 box Point and Figure charts shown below. A toppish formation in price is confirmed and Intermediate trend is down.

A toppish formation and a Bull Trap pattern that has recently formed in 10 box close only chart (Figure 1) is indicating negative setup in the trend. Near term important support levels are around 5630 – 80 levels.

Head and Shoulders pattern shown in Figure 2 of 10 box High Low chart is broken below neck line and indicating the target around 5450 for the Nifty. Point and Figure analysis allows multiple horizontal counts from toppish horizontal pattern such as H&S to define direction for different time frames. A count of 5750 is already been achieved. I said last week that achievement of 5750 will be more bearish for prices. Nifty is trading near anchor point support levels that are also clustering with a count taken from horizontal pattern and 45 degree trend line support formed from May 2012 lows. Nifty closing above 5820 this week might form low pole to indicate higher prices.

From trading point of view, Nifty is in down trend and count direction suggests 5450.  Near term supports are around 5630 - 5650 levels. I expect prices to consolidate for a while. Don’t try bottom fishing and let the base form before buying. Short term bounce is possible from 5630 – 5650 levels up to 5750 – 5800.

     Figure 1: Nifty 10 x 3 Cl Point and Figure Chart

    Figure 2: Nifty 10 x 3 HL Point and Figure Chart

-          Prashant Shah

Disclaimer:
All information provided above is for general information purposes only and does not constitute any investment advice. Company or Author shall not be liable for loss or damage that may arise from use of information provided above. The report is purely for information purposes and does not construe to be investment recommendation/advice or an offer or solicitation of an offer to buy/sell any securities. The opinions expressed are current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Investors should not solely rely on the information contained in this document and must make investment decisions based on their own investment objectives, risk profile and financial position. The readers of this material should take their own professional advice before acting on this information.