Nifty P&F analysis: Resistance? Let price take it!!

Resistance? Let price take it!!

Date: 24^th February 2014

Nifty recovered from the support levels to close at 6155 on last Friday. As mentioned during last week, short trades were to be covered above 6110. I was expecting some price consolidation but price rallied from lower levels and formed a bullish short term pattern. Price is trading at resistance levels of 6160 – 6180 that was discussed during the last post.

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. Double Top Buy signal is triggered in the chart after price took support at the box value of 6000. As shown in the chart; the buy signal has generated short term vertical count of 6220. More upside counts can be plotted if price closes above 6160 but they are the weak counts as long as price is trading below bearish objective line.

Figure 2 is 10 box value chart plotted with High Low prices. Price is currently trading at Anchor Point resistance level. I discussed during the last post that the test of 20 column average is possible if recovery happens. Price has approached the average line which is also the middle band line and a stall is certainly expected around these levels.

Figure 3 is 1 box reversal chart of 10 box value plotted with high low prices. Current pattern of consolidation indicates price range of 5960 – 6180. Horizontal patterns are much visible when 1 box charts are plotted with high low prices. Unlike 3 box charts, Horizontal counts in 1 box charts are plotted from Anchor Point of the pattern and indicate the range of the pattern on both the sides.

Nifty is trading near resistance level and below bearish objective line. Intermediate trend is down. There seems some resistance near 6230 as well. But like support, resistance is a resistance when it is taken. And trades can be taken only when price confirms the same. Double Bottom sell signal will confirm the resistance.

I believe that sideways or range bound movements are expected from here. Hence I would like to opt for conservative approach to take the next signal and also advice quick profit booking. Range bound markets are quiet exciting when we analyse them with timeless charts because they ignore the time consolidation and reveal the pattern of price squeeze that times the break out trade well.

P&F strategy for next week:

Range bound moves are expected. Trade short at next Double Bottom Sell signal which will occur below 6080 in the current setup. Trade Double Top Buy signal if it is occurring above 6180. Follow quick profit bookings.

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 HL Point and 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.