Nifty P&F analysis: Time the markets with timeless charts. Let ‘O’ arrive!

Time the markets with timeless charts. Let ‘O’ arrive!
Date: 10^th February 2014

Nifty witnessed low of around 5933 during last week and formed long legged Doji formation in weekly candlestick charts.

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. Bullish internal lines are broken and price is trading below bearish objective lines. Vertical counts of 5680 and 5350 are established and will get activated if Nifty closes below 6000.

Figure 2 is 10 box value chart plotted with High Low prices. As discussed earlier, setup is negative. Last box value is above lower Bollinger band of column which has traded below the band. Any tick above 6100 will trigger Double Top Buy signal that suggests short trades should be covered.

As discussed during last week post, column of ‘X’ in the downtrend comes with opportunity. Nifty saw 15 boxes (fall of 150 points) move in the last column of ‘O’! Current column is ‘X’ again and that makes setup interesting. Another ‘O’ is opportunity again.

Price is going down and some lower counts are established. Though I don’t want to see beyond 5850 at the moment due to some strong reasons of support near that area and it will become more important if we do not witness significant bounce from here. I don’t see immediate bounce from here but wouldn't recommend short trades above 6100 due to Double top buy signal in high low chart. 6180 – 6200 is a strong resistance if price rallies from here.

Negative column reversal after Double Top buy signal in downtrend is very interesting opportunity and comes with possibility of Bull trap pattern. Such trades are really affordable and should not be missed when trend is strong.

P&F strategy for next week:

I often say that these timeless charts can time the markets very well. In the current scenario, let the ‘O’ arrive to trade short.

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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