Nifty Point and Figure Analysis: Nifty seems set for 5850. ‘O’ is a friend!!

Nifty seems set for 5850. ‘O’ is a friend!!
Date: 13^th January 2014

It is been a lackluster week with range bound moves and consolidating bars.

Chart analysis:

Figure 1 is 10 box chart plotted with closing prices. Not much has happened in this chart since last week. Price has remained in the same column of ‘O’ and currently trading at the previous column support level. Fib level and Anchor Points indicate important support levels at 6100 – 6070. Price is currently testing the bullish internal support line.

Figure 2 is 10 box chart plotted with High Low prices. Recent formation of small columns indicates price consolidation which has resulted in trendline breach. Double bottom sell signal below 20 column average line and recent internal line is a bearish event. Downside vertical count of 5850 plotted from recent high of 6350 has got activated. A vertical count of 5570 from the box high of 6410 occurred during earlier December has also got activated. But first task of that count and a horizontal count indicates possibility of levels around 5800.

Figure 3 is 1 box reversal chart of box value 10. Breach of OSB pattern described in the earlier post has proved to be the important information. I have always observed that breach of weak breakout level (pattern failure?) works well. Process of following price is easier said than done. I do it with P&F method of analysis where I seek price confirmation to all sorts of news and assumptions. 

Supports exist around 6130 and 6070 levels. But setup is bearish and I expect price to see 5850. Support level needs price confirmation that happens when follow up buying occurs after the bounce. Hence Double Top buy signal is important logical setup.

P&F strategy for next week:

A bounce or column of ‘X’ from here is an opportunity to trade short. When setup is bearish, negative column reversal can also be a price confirmation to the resistance. Hence I would recommend to trade occurrence of fresh ‘O’ from here. 

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 10 x 1 cl Point and Figure Chart

                    

                                      

                                       

 -  Prashant Shah, CMT, CFTe

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