Nifty at resistance! Don’t Short!!

Nifty at resistance! Don’t Short!!

Date: 29^th April 2013

Recent up move in Nifty has stunned many and suddenly all charts are becoming bullish!

I need to paste little longer term charts also along with our regular 10 box charts due to formation of long column of ‘X’ in short term charts.

Figure 1 and 2 shown below are 10 box charts. Figure 3 and 4 are 0.25% 3 box reversal charts plotted with closing prices and high low prices respectively. All charts are signaling that price is currently trading near Anchor point resistance levels. Cluster of these levels at multi frame charts reveals their significance. Bar charts are also signaling the stretch and people might talk about resistance near current levels.

This is about analysis. But should we go short at current levels being such a strong resistance level?

Let the price tell us if resistance is taken. And P&F is very clear about this. Sell only if P&F double bottom sell signal below Anchor Point is generated from here. Mute other voices to avoid temptations.

Rather Buy if new column of X is formed from here with stop loss placed at subsequent double bottom sell signal. Even subsequent Double tops are to be bought though we might see some sort of trap formation above anchor point but that’s only the assumption. As a trader I need to take signals in the direction of the trend.

Price behavior near Anchor Point levels give nice trading opportunities. I will write about it some other time for those who are interested.

For those who don’t understand P&F, Supports are around 5820 – 5840 and they are tradable. Long them with stoploss placed at 5790. Don’t short unless price closes below 5790!

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

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

 Figure 3: Nifty 0.25% x 3 CL Point and Figure Chart

    Figure 4: Nifty 0.25% x 3 HL Point and Figure Chart

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      - 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.

Buy Dips, Bet for follow through!

Date: 22^nd April 2013

I wrote in write up of last week that time is to buy Nifty. Asked to buy above 5610 or at any P&F double top signal for tick of 5800. And Nifty got the task even in truncated week. I said that it is not always advisable to buy double top in down trend but base is formed and so opportunity is affordable.

10 box Point and Figure Charts of Nifty for this week are shown in Figure 1 and 2 below. Overall trend is still down and Nifty resistance from here is around 5850 – 5870. Fresh long trades can be taken on dips that makes higher low or subsequent double top buy. I would bet for follow through of this rally. Crucial support levels are marked around 5680 – 5720 levels.

     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.

Time to buy P&F Double Tops in Nifty!

Date: 15^th April 2013

I have received many mails during last week asking the same question. Why did I not suggest short trades or selling at rallies when I was mentioning the bearish target of charts?  

It is important to understand that though Nifty has turned from the mentioned resistance and seen the lows near 5477, price has only consolidated during last week. I don’t think there were any interesting opportunities for trading. We all know very basic thing in the business of trading that it is very important to know when not to trade!!

It is also very important to differentiate between analysis and trading. Every reading cannot be traded.

10 box Point and Figure Charts of Nifty for this week are shown in Figure 1 and 2 below. Nifty is hovering around support levels and prices are trying to settle some. Trend and count direction is negative. But base is formed and there can be affordable buying opportunity if double top buy signal is generated from here. It is not always advisable to buy double top signals in downtrend. But environment is affordable for long traders if that happens. At the moment double top buy signal will be generated above 5610.

Buy Nifty if it trades above 5610 or if double top buy signal is generated from here. We might see a tick of 5800 if that happens.

For those who trade P&F charts, wait for formation of higher ‘O’ from here and then buy when column of X forms. That will provide you affordable buying opportunity. Sell if double bottom occurs because trend is negative.

Let me also take this opportunity to thank the readers for praising, appreciating my work and sharing the feedback.!

    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.

Keep your monitors shut!!

Date: 8^th April 2013

I asked in my last week write up to avoid breakouts. Nifty couldn’t sustain resistance point of 5740 and eventually closed below 5630. I asked to shut terminals below 5600 and it seems they should remain in same mode for a while.

I have been writing that Nifty is in severe downtrend due to multiple bearish formations and supports having become tested resistance levels. As stated last week, weak bounces and strong downward breakouts provide affordable trading opportunities in such cases. Immediate breach of 5600 was not expected but it did it after testing the resistance and that is making the event quiet more important. P&F traders must have enjoyed double bottom sell signal.

Have a look at Figure 1 and 2 of 10 box Point and Figure charts of Nifty. Though I keep a watch on many box and reversal values, I trade these charts and paste them every week for your observation. Nifty is in established downtrend with multiple lower count directions. But it is very important to look left in Point and Figure analysis. Nifty 10 box close only chart is trading near support levels. Another strong support zone is seen around 5425 – 5450 levels. The gap players in bar chart must be looking for supports at the vacuum area in the chart at 5450 – 5525 created due to gap up opening on 

14^th September 2012 if I ignore the dramatic low made on 5^th Oct 2012.

I follow a method of plotting Bollinger band in P&F analysis when I want to trade the extended trend. I have shown them in Figure 3 and 4 in 10 box charts of Nifty. Prices are trading below 2 standard deviation of their 20 column Bollinger band. Multiple box values have seen this set up. I would strictly wait for double top buy signal to trade long in this case. Aggressive traders can cover their shorts from double bottom sell on formation of higher ‘O’ from here.

Key resistance from here are around 5580 and 5630. Supports are around 5425 – 5450.

I don’t have any trading idea for this week. Nifty set up suggests that 5450 is on cards! Better keep your terminals shut and let prices settle. Trading is not compulsory in our constitution.

Brokers will have to trade; they shall only trade shorts unless it is closed above 5630. You might witness a tick of 5450!

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


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


 Figure 3: Nifty 10 x 3 cl Point and Figure Chart

 Figure 4: 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.

Trade Supports and Resistances this week, Avoid Breakouts

Date: 1^st April 2013

As I wrote last week bounce of Monday in Nifty didn’t sustain and it is witnessing sideways trend. I also mentioned that Nifty will respect the support levels atleast once.

Truncated week with lack luster sessions have made P&F charts move very little. Point and Figure chart moves only when price moves. Time consolidations are not plotted in P&F charts.  

Overall setup of the trend is negative with multiple bearish formations. Figure 1 and 2 are 10 box charts. Figure 3 is of 25 box High Low chart for observation of intermediate trend of Nifty. Multiple count direction, bearish formations and trend line breach suggests that lower levels in Nifty is quiet possible. But price is trading near support levels at the moment hence fresh short selling needs to be done at weak bounces or strong downward breakouts to make trades affordable.

Nifty has strong resistance at 5740 and 5790 levels from here. Supports are near 5630 and 5600 levels. Shut your monitors if it trades below 5600!!

I expect Nifty to remain within a range and don’t think that it’ll trade below 5600 immediately. But I am not an astrologer; I am a trader who does all sorts of analysis only to find the levels that can give convincing and affordable trading opportunity. Trading breakouts in sideways trend often proves expensive and trap the traders. Avoid them and trade supports and resistances.

From trading point of view, Aggressive traders can buy Nifty at lower levels near 5630 only if it doesn't close below it. Resistance is at 5740 and 5790 levels.

For those who trade P&F charts, wait for formation of higher ‘O’ from here and then buy when column of X forms. That will provide you affordable buying opportunity. Sell if double bottom occurs because trend is negative.

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

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

    Figure 3: Nifty 25 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.