Nifty P&F analysis: Consolidation likely, ‘O’ to dominate!!

Consolidation likely, ‘O’ to dominate!!

Date: 17^th February 2014

Bounce of Wednesday proved ‘Trap’ for Bulls and ‘O’ arrived. The beauty of associating price pattern to anticipation helps in timing the trade.  

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. Nifty took support at the level of 6000 discussed during the last post. Close below the same will activate various downside vertical counts. Though set up is negative, close above 6090 will trigger the Double Top Buy signal and indicate that shorts should be covered.

Figure 2 is 10 box value chart plotted with High Low prices. Fulcrum pattern in the top indicates that the trend will remain bearish for a while. A trade above 6110 will trigger Double Top Buy signal hence shorts should be covered. 6160 is Anchor Point of the entire horizontal pattern.

I discussed in the last post that negative column reversal after Double Top Buy signal in downtrend is a possibility of Bull Trap.Same thing happened during last week that triggered the trade that was followed by vertical fall in price on Thursday. Charts are bearish and Short trade is active at the moment with the stop of 6110. Test of 20 column average line is possible if recovery happens from here. 6160 – 6180 is a major resistance in that case.

I expect some consolidation or pattern of price squeeze from here. Hence I would recommend fresh Short trades only at Double Bottom Sell signal and not at column reversal from here.

P&F strategy for next week:

Remain short unless above 6110. Consolidation or some price squeeze is possible hence wait for Double Bottom Sell for next trade. 

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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