All time high is news! Follow Price. News does that!

All time high is news! Follow Price. News does that!

Date: 5^th November 2013

Nifty recorded all time high on closing basis on Sunday Muhurat session. Thanks to news-makers everything looks so bullish at new high. People started advising to create portfolios & give Diwali picks etc. Let this all be for them only. It’s an uptrend for a trader, just another trade. Price followers often get such surprises. News follow them.

Nifty closed below 6110 on Monday but reversed on next day. There was no Double bottom sell signal after that hence no short trade. Stoploss was triggered for aggressive treatment to High pole. Fresh buy trade was to trigger at 6210 on closing basis which happened on Tuesday. Chart is bullish at the moment and longs are open.

Charts analysis:

Figure 1: Nifty setup is bullish and trend is up. But recent formation in daily candlestick chart alarms some sort of correction or consolidation. 10 and 14 day RoC are signaling negative divergence setup and suggests that pace of the trend is been reduced at all time high.

Figure 2: Trend is up. Double Top after Triple Top is Catapult signal and makes the setup bullish.

Figure 3: Upper counts are dominating and suggests immediate target of around 6500. The recent pattern is Bullish Broadening formation occurred due to Bull Trap pattern followed by Bear Trap immediately.

High box of both the charts are not touching upper band and this along with daily candlestick chart signals exhaustion. I expect some sort of correction but this is my assumption which cannot be traded. Trend is up and need to remain long unless column is reversed.

Moreover this is a strong uptrend and any corrective might occur to trap weak bears & witness sharp recovery. Aggressive long exit can be planned but short selling need strong reason to trade. Double Bottom sell after relative high can be the reason for it. Hence no short selling unless Double bottom sell signal is formed.

P&F strategy for next week:

Remain long unless column is reversed to ‘O’. Trade long if column is turned to ‘X’ again and price is trading above 6200. No short trades unless Double Bottom sell signal is triggered.

  

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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