Nifty Point and Figure Analysis - Consolidation likely. 6160 reversal level!!

Consolidation likely. 6160 reversal level!!
Date: 23^rd December 2013

Nifty formed another vertical reversal during last week. I was expecting a double bottom sell signal and waiting for it to trade short but it did not occur, rather double top buy signal is triggered at 6220 on Friday. And more importantly, another Mini bottom is formed along with it.

Chart analysis:

Figure 1 is 10 box chart plotted with closing prices. A double top buy signal is formed that has confirmed another Mini bottom. This double top signal has given us opportunity to draw another 45 degree internal line to trail the trend further that makes longs more affordable from here. A vertical count of 6350 is activated as well.  

Figure 2 is 10 box chart plotted with High Low prices. The vertical reversal of price has formed low pole pattern immediately after high pole pattern. This opposing poles pattern indicates some price consolidation going forward.

P&F setup in Nifty at the moment has become interesting. Longs are in and trend line from mini bottom is running close to the current columns to trail the trend. A double bottom sell signal below reversal point will give us an opportunity to trade short. Reversal level at the moment is at 6160.

Close below 6210 will form High pole pattern hence longs should be exited if closing price happens to be below the same.

P&F strategy for next week:

Longs should not remain in below 6210. Column reversal exit (Formation of ‘O’) is recommended for profit booking. I expect some sort of price squeeze or consolidation. Reversal level is 6160 currently and a close below the same or Double bottom sell signal should be the reason to trade short.

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Figure 1: Nifty 10 x 3 CL Point and Figure Chart

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

                           

                                      

 -  Prashant Shah, CMT, CFTe

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