A tick below 5960 will make us see 5820!!
Date: 3^rd June 2013

We had a flat last week if weekly closing prices are compared!! The rally of Monday turned out to be the trapping pattern for bulls. I was asked an interesting question for the title in the last week write up asking not to long. I was asked that why I didn't suggest to go short instead of saying ‘Don’t Long’!!

This is important to understand. Trading strategies cannot be only abut Long and Short. Not to long, Not to short or avoid the counter are the important aspects of the trading business. We decide not to long when short is not affordable. Shorts or bears must have been triggered out by Monday rally.

I wrote in summary that P&F traders can go short in next formation of O. Column of O is formed in closing price chart when Nifty went below 5990 (Figure 1).

10 box High Low chart has formed Double bottom sell signal below 6070 box value and count directions of 5970 and 5720 are been activated. As can be seen from the chart, The set up is been negative for prices in near term. Double bottom sell signal after High Pole, Relative High and Bull trap is the signal not to be missed.

As saild earlier, I expect some price consolidation. We might see some range bound moves in days to come. A tick below 5960 from here would be very bearish for the prices and might trigger a drop till 5820 – 5770 levels.  6140 is a trend reversal point for this negative set up. More up counts will be activated if that level is been breached.

For P&F Traders, Trade double bottoms and ignore double tops as of now. Experienced P&F traders can trade formation of Os as well.

 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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