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

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