Nifty at resistance! ‘O’
remain exciting!!
Date: 20th January 2014
Date: 20th January 2014
Nifty bounced from support level
of 6170 to test 6340+ levels during last week to close near 6260 on Friday. P&F
chart column has turned to ‘O’ on Friday that has triggered the short trade
with stoploss of four boxes.
Chart analysis:
As mentioned during last post, I
am anticipating lower levels going forward. There are benefits of attaching
methods to anticipation or analysis. As explained, I wanted ‘O’ to arrive for
trading short which happened on Friday that generated the trade. And due to
this I have not been shorting the price that is going up but shorted it when it
stopped going up and with logical stop in place.
Figure 1 is 10 box chart plotted
with closing prices. Price witnessed sharp bounce from support levels and
tested the Upper Bollinger Band. Colum turning to ‘O’ from upper band confirms
the resistance and indicates some downside even if it has to remain sideways
for a while.
Figure 2 is 10 box chart plotted
with High Low prices. Price tested the Upper Bollinger Band in this chart as
well. Shrinking band indicates price squeeze and some indecision or uncertainty
that is prevailing in the market at the moment. Bull Trap bearish signal will
be generated below 6230 in this chart hence this level becomes important.
Figure 3 is Weekly candlestick
chart of Nifty. Last week candle is a bearish shooting star that has occurred
near levels of Bearish Engulfing pattern that was formed 2 weeks before (Both
are circled in the chart). This indicates some supply that is coming at higher
levels and possibility of downside in the prices going forward.
Overall setup is negative and
there are some confirmations as well. But shrinking bands are indicating range
that is becoming narrower and trend is more of sideways at the moment. Breach
of 6230 will strengthen the bearish view. Price is trading above bullish
objective line at the moment hence I would like to treat 6330 as a reversal
level. One should not remain short above the same.
P&F strategy for next week:
Trade ‘O’s and trade Double
Bottom sell signals unless price trading above 6330.
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| Figure 1: Nifty 10 x 3 CL Point and Figure Chart |
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| Figure 2: Nifty 10 x 3 HL Point and Figure Chart |
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| Figure 3: Nifty Weekly Candlestick 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.
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.
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