Nifty Point and Figure analysis: Trend is up, Longs are out!!

Trend is up, Longs are out!!
Date: 16^th December 2013

News is that Nifty has made all time new high. Trade is that longs are out!

Chart analysis:

Figure 1 is 10 box chart plotted with closing prices. The High Pole bearish pattern is been formed near resistance line of a megaphone pattern and near previous price column resistance point. It is not advisable to trade short always at occurrence of High Pole but shall not remain long.  

Figure 2 is same chart plotted with High Low prices. High Pole formation took place in this chart as well at 20 column Bollinger upper band. It is a serious vertical reversal when High Pole pattern also generates Double bottom sell signal in the same column.

High Pole is formed when reversals are vertical. There are some frequent High poles in this uptrend and it basically indicates lack of follow up buying that suggests weakness in the uptrend.

I mentioned that I would like to follow levels from High Low charts because price is approaching resistance point. The stop was trailed to 6230 but High Pole pattern triggered the early exit. Trend remains up until objective line from mini bottom is breached. Figure 3 shows the recent P&F setup in daily candlestick chart. Pattern A and C are High Poles and B is a Low Pole pattern.

P&F strategy for next week:

Go short at Double Bottom sell signal from here. We will have to take it in uptrend due to reversal pattern that has formed near resistance point.  We usually long on formation of ‘X’ in a strong uptrend but we will have to wait for Double Top Buy signal to go long again in this setup. 

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 Daily Candlestick & 10 x 3 HL Point & Figure Chart

                                

 -  Prashant Shah, CMT, CFTe

Disclaimer:
All information provided above is for general information purposes only and does not constitute any investment advice. Company or Author shall not be liable for loss or damage that may arise from use of information provided above. The report is purely for information purposes and does not construe to be investment recommendation/advice or an offer or solicitation of an offer to buy/sell any securities. The readers of this material should take their own professional advice before acting on this information.