Nifty Point & Figure Analysis: 7000?? Let ‘X’ decide!!

7000?? Let ‘X’ decide!!

Date: 10^th March 2014

Nifty makes new high and enters in new territory, new price zone. As per discussion during last post on trading strategy, a sell call was generated on Monday due to negative column reversal below trend line but it reversed to buy call when price traded above 6290 on Tuesday. The breakout has resulted in long column of X of 29 boxes (290 points).

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. We discussed in the post of last week that ratio of ‘X’ and ‘O’ was exactly same and price was at equilibrium. Price went down initially and triggered negative column reversal but picture changed on Tuesday. Double Top Buy signal generated above bearish line and pattern clearly declared that bulls have gained the control.  

Figure 2 is 10 box value chart plotted with High Low prices. Price has witnessed multi breakout pattern and all previous resistances are beaten. As shown in the chart, the breakout from long consolidating patterns suggests horizontal counts of 6720 and 7020.

I wanted to trade column reversal because I anticipated at least one bearish column even if price has to go up. Beauty of P&F is that it immediately signals when anticipation goes wrong and price is doing something else.  My experience in the business of following price has been that serious gains happen when I am least comfortable in taking the signal!!

Previous bearish lines are breached and Trend is changed to up. Bulls have gained the control and ‘X’ is ruling. Correction or column of ‘O’ from here will be an opportunity to trade long because that will give ‘X’ a chance to arrive again. Count direction is up and price seems to be set for higher levels. We would not remain long if High Pole or Double Bottom occurs but ‘X’ is a dear friend till price is above bullish line. Let it decide if we are heading for 7000 or forming a bull trap.

Positive column reversal should be traded from here if occurred above 6380. High Pole bearish reversal pattern will be formed if price trades below 6380. Ignore Positive column reversal and wait for Double Top buy signal to enter if that happens.

P&F strategy for next week:

Remain long and trade fresh “X’ if it arrives above 6380.

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

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.