Avoid noise. Track ‘X’!!
Date: 18th March 2013
Price has done very little during
last week, There has been no fresh ‘X’ and a small column of ‘O’ is been formed.
Chart analysis:
Figure 1
is 10 box value chart plotted with closing prices. Trend is up and bulls are controlling
the price. Recent column of ‘O’ is indicating some price correction but such
columns make us realize that even ‘O’ looks bullish when uptrend is strong and
established because they come with the possibility of fresh ‘X’ and help us in
timing the trades. Formation of ‘X’ from here is an opportunity.
Figure 2
is 10 box value chart plotted with High Low prices. Recent column of ‘O’ in
this chart has got more boxes compared to chart plotted with closing prices
(Figure 1). This is because price made new low on Friday but recovered while
closing. Price trend is been steep but this is one of the major features of
massive bull trends.
Price if
trades below 6380 will form High Pole vertical reversal pattern in both the charts
hence longs should exit if that happens. But I would like to bet on every
formation of ‘X’ unless the bullish objective line is broken. Support seems
around 6300 – 6330 if price corrects from here. Major trend is bullish and
upside counts of 6700 - 7000 are active at the moment.
Figure 3
is 1 line break chart of Nifty plotted with closing prices. Like P&F, Line
break charts also don’t plot time & volume.
Their construction logic is very much different from that of P&F
hence they can be helpful at times to analyse the price structure along with
P&F. If you observe the 1 LB chart,
uptrend that is begun in earlier Feb this year is witnessing first appearance of
two consecutive red lines since then. It indicates that a short term top is
around.
Fresh appearance
of ‘X’ in P&F will come with blue line in 1 line break charts as well which
should definitely be traded but exit point should be the column reversal. In
simple words, look for quick profit bookings in fresh longs.
I was recently
reading a report explaining so many reasons of this bull market and the factors
that are important to make it remain bull from here. May it be Technical or Fundamental,
analysing and tracking so many factors would always be difficult for a person
and result would either be the over-trading or no trading at all. While such
things are very important for improving our knowledge they can’t help much
while trading, rather they can be very dangerous. Avoid such noise and track ‘X’.
Only that can make your ledger look better. Let analysts do rest of the things.
P&F strategy for next week:
Let the ‘X’
appear. Trade with stop placed at column reversal.
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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 1 Line Break 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.
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