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.