Nifty P&F Analysis: Avoid noise. Track ‘X’!!

Avoid noise. Track ‘X’!!

Date: 18^th 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.

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 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.

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.

Nifty P&F analysis: Price at equilibrium, Battle becomes exciting!!

Price at equilibrium, Battle becomes exciting!!

Date: 3^rd March 2013

It is been a sharp recovery in Nifty that has filled the gap of daily and weekly bar charts. I was not expecting such a steep bounce and quiet surprised by it. But as mentioned during last week, box above 6180 was a buy signal in the chart.

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. The vertical count of 6220 is beaten and more counts are activated. But price has approached 45 degree resistance line. Double Top Buy signal above this line will make the intermediate trend turn to up. High Pole bearish pattern will be triggered if Nifty closes below 6180.

Figure 2 is 10 box value chart plotted with High Low prices. It’s a bullish range breakout but price has approached the bearish resistance line. Though last trade was bullish the setup is bearish at the moment and short trade seems more affordable than long.

As mentioned during last post, we keep anticipating points of resistance when price is going up. But price should confirm it to take the trade. I expected the resistance during last week but price did not reverse and continued with the column of ‘X’. I expect price to reverse from here but trade can happen only if and when ‘O’ arrive below the bearish objective line.

It is important to understand that price trading below the 45 degree bearish line mean that it is falling more than it is going up. This is a downtrend. Currently, price is trading exactly at the bearish objective line drawn from box high of 6340 formed during Jan 2013. Hence it is trading at equilibrium. Notice the Bull Ratio numbers shown in the figure 1. The ratio is 50% which means that number of ‘X’ and ‘O’ from the swing high are exactly the same at the moment. It becomes interesting to see the formation from here in this completely enthralling battle. If bears are more powerful we will get High pole or double bottom sell. If bulls have decided to change the structure, we will get double top buy above the bearish line.

An arrival of ‘O’ below bearish line is tradable with the stop above the high of previous column of ‘X’. Short term trend may turn from up to sideways and hence quick profit booking is advisable. Price going below 6180 will form the High Pole pattern in both the charts and make setup more bearish.

P&F strategy for next week:

Exit longs and wait for the next Double Top Buy signal above 6250. Sell at column reversal with stop above high of ‘X’ (Currently 6290). 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

                           

 -  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.

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.

Nifty P&F analysis: Consolidation likely, ‘O’ to dominate!!

Consolidation likely, ‘O’ to dominate!!

Date: 17^th February 2014

Bounce of Wednesday proved ‘Trap’ for Bulls and ‘O’ arrived. The beauty of associating price pattern to anticipation helps in timing the trade.  

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. Nifty took support at the level of 6000 discussed during the last post. Close below the same will activate various downside vertical counts. Though set up is negative, close above 6090 will trigger the Double Top Buy signal and indicate that shorts should be covered.

Figure 2 is 10 box value chart plotted with High Low prices. Fulcrum pattern in the top indicates that the trend will remain bearish for a while. A trade above 6110 will trigger Double Top Buy signal hence shorts should be covered. 6160 is Anchor Point of the entire horizontal pattern.

I discussed in the last post that negative column reversal after Double Top Buy signal in downtrend is a possibility of Bull Trap.Same thing happened during last week that triggered the trade that was followed by vertical fall in price on Thursday. Charts are bearish and Short trade is active at the moment with the stop of 6110. Test of 20 column average line is possible if recovery happens from here. 6160 – 6180 is a major resistance in that case.

I expect some consolidation or pattern of price squeeze from here. Hence I would recommend fresh Short trades only at Double Bottom Sell signal and not at column reversal from here.

P&F strategy for next week:

Remain short unless above 6110. Consolidation or some price squeeze is possible hence wait for Double Bottom Sell for next trade. 

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.

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

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.

Nifty P&F analysis: Downtrend established. ‘X’ comes with opportunity!!

Downtrend established. ‘X’ comes with opportunity!!
Date: 3rd February 2014

As expected and discussed, Nifty witnessed sharp fall during last week to close around 177 points lower compared to its previous week close. Short trades have done well. I mentioned during the last post that ‘O’ has never been such a mouth watering. Have been talking about negative trend during last several posts and discussed about target of 5850.

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. As discussed during the last post, Nifty has formed a classical Bull Trap formation below 6260. Bullish internal objective lines are breached and downtrend is been established with some more downside counts being activated. Price is currently trading at a Fib support level.

Figure 2 is 10 box value chart plotted with High Low prices. Setup is negative and count direction is down. A horizontal count from the entire top pattern and a Vertical count from a recent breakout column come to the same count direction of 5570 meaning that the pattern is square. I mentioned about Anchor Point support area at 6180 levels and that support can become bearish when trend is down. Circled spot in chart shows the formation at Anchor Point. Bounce in prices witnessed resistance at previous support levels. ‘X’ becoming ‘O’ was an opportunity near that area.

I plot and trade 10 box charts but also track other box values and reversal values to anlayse the overall set up. Figure 3 is 1 box reversal chart of Nifty with box value 100. Two consecutive One step back patterns are followed by the downside breakout. Nifty has seen stiff resistance at 6300 box value. Rejection of uptrend is being confirmed with the breach of 6100. 300 to 500 points correction cannot be ruled out in this case. 5900 is a possible short term support area.

Downtrend is established with the breach of bullish internal lines. 6180 – 6200 should work as a strong resistance in case of recoveries from here. In a downtrend, ‘X’ looks more bearish. It comes with an opportunity of another column reversal that makes trades affordable and ensures that weak shorts are out. Price might opt to settle down or witness some bounce after such a steep fall which can be taken care by ‘X’.

P&F strategy for next week:

Trend is down and ‘O’ should be traded. ‘X’ comes with opportunity of column reversal that can give affordable levels for fresh short trades.

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 100 x 1 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.