Trade Fresh O from here. Double Top if above 5860!!
Date: 29^th July 2013

Indicated possibility of a halt in uptrend in last week write up and the resistance area of 6060 – 6080 was mentioned. Looking left in P&F chart always help to find Support and Resistances. Nifty made high of around 6093 during last week and high box value of 6070 was marked in 10 box chart drawn with closing prices.

It is interesting to observe why I asked to leave longs below 5950. It has triggered Bull trap pattern near bearish objective line and that indicates near term weakness! The same can be observed in Figure 1 and 2 shown below. Unambiguous P&F patterns help in knowing about the pattern formation in real time or the level at which it will form! Occurrence will take care of time!

Short term downside vertical counts are activated in both the charts during last week. Larger degree trend seems forming some contracting pattern because both side internal lines are not breached and several counts are open in both the directions. I believe range expansion will happen but let price make us trade it.

Some support is visible between  5800 and 5840 on closing basis. But we have a setup worth not missing. First formation of O after Bull Trap near bearish objective trend line is an affordable set up especially for aggressive traders. Trade them with stoploss placed at high of that column. (30 points stoploss in 10 box chart). One might want to vary box size to manage risk.

And any double top Buy above 5860 must be taken because that will keep the price above bullish internal line. Stoploss to be placed on subsequent Double Bottom Sell signal.

Figure 3 is 1 box reversal chart of 0.25% Box value for observation. It helps in infusing some noise to P&F charts for analysing larger degree formations. Planning to start writing exclusively on 1 box charts.

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 1 CL Point and Figure Chart

--          Prashant Shah

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