Nifty P&F analysis of various time frames
Date: 28th July
2014
Nifty last closing price: 7790.45
Chart 1 is 10 box value
chart plotted with daily closing prices. Triple bottom sell signal was negated
by the price when it went above 7780. This is bullish action. Failure ratio of Triple
bottom sell signal is revealed upon back testing when it occurs on closing
prices.
Column has turned to ‘O’ which
gives opportunity for higher bottom to be formed that can make long trades
affordable.
Chart 2 is 10 box value chart plotted with daily high-low prices.
Column is not reversed because new high was formed by the price on Friday. It
will change the column if price doesn’t make new high (box value) and trades
below 7810 on Monday. Various upper counts are open which are shown in the
chart.
Both the charts are bullish and
column turning to ‘O’ is good news for the bulls in charts like this because
they can provide affordable fresh trades. Note that waiting for column to turn
to ‘O’ after triple bottom sell signal must have saved many bears when chart
forms such vertical column of ‘X’. Lower time frame charts shown below can help
the traders in trailing the stops when long columns are formed on higher time
frames.
Chart 3 is 10 box value
chart plotted with hourly high-low prices. It is interesting to see that first
double bottom sell signal occurred on Friday at 7760 after forming the bottom
at 7430 in this chart. That goes well with daily time frame charts. But this
being high-low chart, I would like to see a follow through. Down side count of
7570 will be formed if Nifty falls below 7740. Even chart plotted with closing
prices of same data (not shown) will generate sell signal if price closes below
7750 on hourly basis.
Though it is certainly a long
exit signal, such corrections give opportunity for Mini bottoms to occur and
activate more upside counts. Needless to mention a trade in P&F cannot be
initiated unless basic patterns are formed.
P&F can help one ride the
trend on all time frames.
Chart 4 is 5 box value chart plotted with closing prices of every
minute. Objective trend lines are drawn from various mini-bottoms that are
formed at various levels. Various markings in the chart is enough to explain
how every analysis that we do on higher time frame charts is equally applicable
and effective on very lower time frames. It can help even to medium term traders
in abstracting more information from data.
The chart in Figure 4 is plotted with
more than 4000 data bars. That information alone is enough to explain why P&F
is called the best method to remove noise from the data.
All charts shown here are 3 box
reversal charts. 1 box value chart of 1 min data (not shown) shows
interesting
Fulcrum (reversal pattern) in making that suggests supports around 7750 and
7710 for the prices.
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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 cl Point and Figure Chart |
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| Figure 3: Nifty 60 min 10 x 3 HL Point and Figure Chart |
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| Figure 4: Nifty 1 min 5 x 3 cl 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.
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.
