Let price confirm if this is a Supply zone!

Let price confirm if this is a Supply zone!

Date: 23^rd September 2013

P&F (following only price) remove the noises and I mean it.  Noise is external and internal as well. There is so much that is been talked about markets and setup that may result in over analysis which is a disease. We need to create our island for not listening to others and our ‘gut feelings’ but to follow what price does.

I mentioned during last week write up that sideways are expected and P&F can help in trading them. First three days were sideways. P&F double top signal occurred on last Thursday and column reversal exit on Friday. Gap up made us enter at higher prices but that trade should have been taken because we decided aggressive exit at column reversal which triggered during next day.

I have been saying that price is near resistance since two weeks now. I am lucky to have understood that trading such assumptions is a dangerous business. Figure 2 is 10 box chart plotted with High low prices. High Pole bearish pattern is formed and we need double bottom sell signal from here to trade it.  Figure 3 is a picture of Anchor Point set up. I apply anchor point from significant pivots to plot the levels of demand and supply zone. Price is trading at supply zone at the moment and all it need is Double bottom sell signal to confirm the supply.  

Hence Double bottom signal from here should be traded that needs aggressive exit. Why aggressive exit? First sell signal in Bull set up should be ignored. But we will take it due to other confirmations with column reversal as exit point. Subsequent Double bottom sell signals can be taken with regular exit. Any Double Top signal occurred above 5900 should be taken. Signal above 5900 because that will confirm the breach of bearish objective line drawn from previous high box value of 6180 formed in the month of May 2013.

In brief, follow Double top signal only if it is occurred above 5900. And follow first double bottom sell signal from here with exit at column reversal (formation of ‘X’). No entry at column reversals.

 

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 P&F chart showing Anchor Point set up

 - Prashant Shah

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