Nifty - Point and Figure Analysis

Trade ‘X’. No short Sell unless DB signal is triggered!!

Date: 14^th October 2013

Markets keep making my belief stronger that following the price is much better business than predicting the markets. There are so many factors affecting the price structure and no trader or analyst can track or know all of them. Fortunately, P&F objectivity helps to control such biases and follow what price is doing.

I was bit bearish looking at the resistance but discussed that let price confirm it by changing the column from X to O, which it did not happen. Also discussed that breakout above 5900 will be bullish and negate the downtrend. Double Top Buy signal in High Low chart is generated above 5960.

Charts and analysis:

Figure 1 displays daily candlestick chart of Nifty. Price has formed Hanging man candlestick pattern near horizontal resistance line.  This indicates possibility of reversal or change in trend. Figure 2 is 10 box P&F chart plotted with closing prices. Chart shows that ‘Opposing poles’ bullish pattern is been formed because of High pole (bearish) pattern that is been followed by low pole (bullish) pattern. Figure 3 is 10 box P&F chart plotted with high low prices. Double top above 5900 has formed mini bottom and activated the count direction of 6430.

Trend and count direction is up and price is at resistance. We shall not trade negative column reversal now because price is above bearish resistance line. Wait for double bottom sell signal for price to confirm the resistance.

P&F strategy for next week:

Wait for double bottom sell signal to trade short. Buy formation of ‘X’ from here with aggressive stoploss (column reversal).

 Figure 1: Nifty Daily Candlestick Chart

    

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

     

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

-  Prashant Shah, CMT, CFTe

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