Nifty - Point and Figure Analysis

Sunday, 10 August 2014

Nifty P&F analysis

Nifty P&F analysis

Date: 11th Aug 2014

Nifty last closing price: 7568.55

Chart 1 is 10 box value chart plotted with daily closing prices. Price remains above bullish line but bearish patterns have activated downside counts. It is more of a sideways and column consolidation pattern and price pattern near trend line would be interesting setup.

Chart 3 is 10 box value chart plotted with hourly high-low prices. Count of 7570 discussed during last write up has been achieved by the price. It also falls near Anchor Point level of the entire pattern and some support is expected around these levels but that needs to be confirmed by the price. A count of 7450 is opened up in this chart as well.

Chart 4 is 5 box value chart plotted with closing prices of every minute. Price is trading below bearish line. Negation of the Triple bottom sell pattern would be the first indication of price taking support near Anchor Point.

Figure 1: Nifty 10 x 3 CL Point and Figure Chart

Figure 2: Nifty 10 x 3 cl Point and Figure Chart

Figure 3: Nifty 60 min 10 x 3 HL Point and Figure Chart

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.

Sunday, 3 August 2014

Nifty P&F analysis

Nifty P&F analysis

Date: 4th Aug 2014

Nifty last closing price: 7602.60

Chart 1 is 10 box value chart plotted with daily closing prices. Double Bottom sell signal in this chart was certainly a trigger for a medium term trader also to exit longs. It opened the small count of 7590 that is been achieved in the immediate column. Counts above bullish lines are considered weak but immediate achievement and overall formation has changed the trend from up to sideways. Price remains above bullish line but a 6 column bearish trap formation has been formed

Chart 2 is 10 box value chart plotted with daily high-low prices. Sell signal occurred in this chart well along with a breakout horizontal count that signals 7420. But I would like to refer lower time frame charts for further examination.

Chart 3 is 10 box value chart plotted with hourly high-low prices. Last week chart is continued. Trap and high pole occurred at previous bearish formation levels confirming the supply. Activation of count of 7570 below 7740 was discussed in the last write up. It also falls near Anchor point of entire pattern hence reversal signal near that level would be an interesting setup.

Chart 4 is 5 box value chart plotted with closing prices of every minute. The count of 7710 acted nicely and price seen a sharp bounce from those levels which also took it above bearish resistance line. But follow through was failed and price again fell below resistance line. Waiting for signal after break helps a trader in scenarios like this. It formed the mini top that opened the count of 7610 which is already been achieved. ‘O’ is dominating the right side of the chart and price trading below bearish line hence in downtrend but near some support areas if looked at left. Price pattern confirming the reversal is always better than the falling knife.

Figure 1: Nifty 10 x 3 CL Point and Figure Chart

Figure 2: Nifty 10 x 3 cl Point and Figure Chart

Figure 3: Nifty 60 min 10 x 3 HL Point and Figure Chart

Figure 4: Nifty 1 min 5 x 3 cl Point and Figure Chart

- Prashant Shah, CMT, CFTe

Sunday, 27 July 2014

Nifty P&F analysis of various time frames

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.

Figure 1: Nifty 10 x 3 CL Point and Figure Chart

Figure 2: Nifty 10 x 3 cl Point and Figure Chart

Figure 3: Nifty 60 min 10 x 3 HL Point and Figure Chart

Figure 4: Nifty 1 min 5 x 3 cl Point and Figure Chart

- Prashant Shah, CMT, CFTe

Tuesday, 1 July 2014

Nifty P&F analysis: Nifty forms Mini Bottom, Make longs affordable!!

Nifty forms Mini Bottom, Make longs affordable!!

Date: 1st July 2014

Nifty has formed Mini Bottom at 7500 when it closed above 7580 on last Monday
This was Double top buy signal triggered after column ‘O’ took support exactly at previous column lower box value
Nifty has also formed 6 column Bullish Bear Trap pattern with this
Upside counts shown in Figure 2 and 3 have got activated

Figure 1: Nifty 10 x 3 CL Point and Figure Chart

Figure 2: Nifty 10 x 3 cl Point and Figure Chart

Figure 3: Nifty 10 x 3 HL Point and Figure Chart

- Prashant Shah, CMT, CFTe

Wednesday, 18 June 2014

Nifty P&F analysis: P&F column squeeze, Basic signals can guide!!

P&F column squeeze, Basic signals can guide!!

Date: 19^th June 2014

High of 7700.05!! No, I am not that precise in targets. In fact achievement of a bullish count in an uptrend is treated as a bullish event. Nifty is trading around 7550 this morning after recording the high on 11^th June.

Figure 1 is 10 box value P&F chart plotted with closing prices. Interesting setup of column squeeze is developed in this chart. Call it triangle, sideways or anything else. This squeeze is expected to be followed by expansion. Price trend is up and trading way above bullish line.

Figure 2 is 10 box value P&F chart plotted with High Low prices. Price is trading above 20 column average line since breakout happened at 6300 levels. Circled area shows the price noise and intraday day volatility. Last several sessions must have been difficult for lower time frame traders.

This setup of column squeeze provides excellent opportunity to trade P&F basic signals of Double top buy and Double bottom sell. Various assumptions and analysis must be around to call it top or pull back. One side will be proved wrong upon price breakout. We want signal from price to follow. The narrowing columns make stop closure. Worry of breakout signal proving false or trap can be dealt by making column reversal as an exit strategy if breakout column happens to be long. Current range is 7640 – 7530 on closing basis.

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

Sunday, 18 May 2014

Nifty P&F analysis: 7700 before 7000? Let’s follow ‘X’ to know!!

7700 before 7000? Let’s follow ‘X’ to know!!

Date: 19^th May 2014

Finally.. Ache din aa gaye! What a nice feeling to have a stable government with clear mandate.This definitely is a special Sunday. I have to deal with this sense of positivity while writing about the charts that are bullish as well J

At times it is very difficult even for an experienced trader to deal with the external stuffs especially when event is not an ordinary. Mentioned during last post that price has clarified the direction and set up is bullish. Longs have no reason to exit unless double bottom sell or high pole triggers. Still stand by that!

Price Analysis:

Figure 1 is 10 box value P&F chart plotted with closing prices. Count of 7160 discussed during last post is been achieved. Achievement of bullish count above bullish line is actually a bullish event. Current column of ‘X’ is consisting of 54 boxes now (540points) and High Pole pattern will be formed in this chart if price closes below 6930.

Do such long columns suggest that we should exit our longs and/or short because price must be ‘exhausted’ and some ‘profit booking’ or ‘correction’ may occur? An acceptance of the fact that one cannot buy right at the bottom and sell at the top can make one realize and stick to a method of following the price. Rather give lot of piece in the life.

Figure 1A: Benefits of Price following

Picture 1A is a perfect demonstration of benefits of a disciplined of price follower. A long column followed after a complex expanding formation (whipsaws) in Nifty right before election week (Price noise).

Closing prices doesn’t pay attention to intraday noise and hence plots relatively clear patterns. All sorts of backtesting suggest that patterns of charts plotted with closing prices are more profitable than any other plotting hence I obtain signals from pattern formed in these charts only. Charts plotted with high low prices give more information about intraday moves. Though it display more noise but can benefit short term traders if tactfully used.Short term traders would like to lock in some profits and take another signal in the direction of the trend.

Figure 2 is 10 box value P&F chart plotted with High Low prices. I think twice before plotting the vertical count in charts that are not plotted with closing prices. The column that has triggered 7700 is a breakout column of price consolidation pattern and appeared after a significant bottom formation that was indicating the negative break out hence a classical bear trap formation. And 7700 is a conservative count (2/3^rd) being the long column. Aggressive count signals 8230.

This chart plots high of 7560 that was formed on last Friday but some significant selling happened and price closed around 7200 in the end. A high pole pattern will be formed if price closes below 7330 on Monday. This information can be used by longs to book the profits for a while. And long again upon positive column reversal (Reappearance of ‘X’).

In brief:

I do believe that we are on for 7700. But a column of ‘O’ on closing charts is quiet possible before that which should not breach bottom of 7000. But this just the assumption and following ‘X’ is more profitable.

Remain long unless double Bottom sell or High Pole bearish pattern is formed. High low chart pattern discussed above can be used for exiting the longs. But reiterating, missing ‘X’ in such a strong chart is a sin.

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

Sunday, 11 May 2014

Nifty Point and Figure analysis: Only price… Har baar!!

Only price… Har baar!!

Date: 12^th May 2014

As we enter to the very important week being results of the 2014 General elections to be declared on the coming Friday, a trader must be aware that he has to deal with internal noise as well along with external. We are also a normal citizen along with a trader. Expectations of both should not be mixed and duties of both are different. Knowledge for one is noise for another. Wish of one should not be the reason of other to trade. Exit polls to be out on Monday will assure the happening week with various news, rumors coming in that will affect the price and increase the volatility.

Price Analysis:

Figure 1 10 box value P&F chart plotted with closing prices. A very rare expanding pattern is formed in this chart. A bullish broadening pattern was followed by Bearish Broadening formation when box value of 6660 was plotted on last Wednesday. Upon backtesting I found that there are only two occurrences of this kind of bearish pattern in the uptrend (above 20 columns SMA) in Nifty chart and both of them were failed.

Past occurrences of Bearish Broadening after Bullish Broadening:

Short Entry	Date	Short Exit	Date	G/L%
5616.11	16-11-07	5735.21	12-12-07	-2.12%
5590.92	09-11-12	5761.06	06-12-12	-3.04%

I wrote on Twitter about this and that the appearance of ‘X’ would be exciting. Knowing the occurrence of non-profitable bearish pattern in the uptrend is certainly an important information. ‘X’ appeared on Friday in style. And now this has become a seriously expanding pattern with another higher leg. The setup is certainly bullish and count of 7160 is active.

Figure 2 is 10 box value P&F chart plotted with High Low prices. Price bounced from critical Fib level and 20 column Moving average line with Double top Buy pattern. It is also a bear trap pattern that suggests that traders who shorted on downside breakout is stuck and trapped. Figure 3 is 1 box chart of box value 10. Price above 6710 is a breakout from OSB pattern which is significant news.

Chart setup is certainly bullish and trading above bullish lines. But challenge this time even for experienced traders is to deal with the external noise and mood swings. Such multi-column expanding pattern right before election result reflects the confusion among the participants and difficulty of traders with whipsaws of the systems. So price has also generated some noise during last several days. Friday move in that sense is quiet satisfying because price seems to have cleared the direction. These setups in uptrend are definitely bullish.

In brief:

Not only ab ki baar... but har baar price should be the sole reason trade.And If that is the case, we are entering just another week!

I would recommend to trade and remain long unless price closes below 6650. Missing any appearance of ‘X’ in this kind of a chart setup is a sin. There are only two reasons to exit longs, Double Bottom sell or High Pole bearish pattern. And fresh shorts can only be traded below 6650 being below bullish objective line.

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 0.15%, 0.25% and 1% P&F charts

- Prashant Shah, CMT, CFTe