Nifty - Point and Figure Analysis

Sunday, 27 October 2013

Nifty: Point and Figure Analysis

Trend is up. 6110 important level!!

Date: 28^th October 2013

I have been saying that following price is a much better business and worth enjoying. Column reversal triggered exit from longs below 6170 during last week. So position is neutral at the moment and trend is up.

Charts analysis:

Figure 1: Trend is up and upper counts are dominating. Triple top breakout has made the setup bullish. So I am looking for longs. But close below 6120 will form High Pole bearish formation and longs cannot be taken then unless new high box is made. Hence Fresh longs are only possible if Nifty closes above 6210. Anchor Point supports are around 5850.

Figure 2: As can be seen in the chart, low below 6110 will form Bull trap bearish pattern and it will trigger opportunity to go short. Prices might come to 5900 in that case. Fresh longs to be taken if high is made above 6260.

P&F strategy for next week:

Hence setup will become quiet bearish below 6110. And subsequent double bottom sell signal must be taken. Aggressive traders can short at 6110 also with stoploss placed at 50 points (5 boxes).

Fresh long should be taken if price closes above 6210 or high is made above 6260.

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.

Sunday, 20 October 2013

Nifty - Point and Figure Anlaysis

Trend is up. No award is given for selling right at top!!

Date: 21^st October 2013

I mentioned in the last post that trend and count direction is up. Trading X in the uptrend is a delight. It is not very easy to trade long in markets that has is already rallied and many analysts keep calling tops.

Nifty has touched 6200. I could not predict this rally and it has surprised me. If you go through my past several posts, I was looking for resistance to short sell. But fortunately, the practice of price letting confirm worked and it never generated the sell signal. Rather it kept generating opportunities for long.

People trade reversals because they feel them affordable due to tight stoploss. But they forget that they are trading against the trend. In an uptrend, longs are more affordable. We keep feeling resistance as price accelerates but price needs to confirm the reversal before trading shorts. This will make one help in trading trade trending and range bound markets as well.

If I am asked about so called secret of the market to trade them successfully, I believe it is about differentiating between trades and assumptions.

Charts and analysis:

Triple top buy pattern is formed in the 10 box chart plotted with closing prices (Figure 1). The signal in uptrend is a bullish setup. And some more upside counts are generated. But the first achievable count seems 6430.

Price in 10 box chart plotted with high low prices (Figure 2) is trading near 20 column Bollinger band which happens in strong uptrends. But this also indicates temporary exhaustion and that makes me ask to exit longs on column reversal (from ‘X’ to ‘O’). This will secure the profits in the current uptrend. No short selling unless double bottom sell signal is generated.

P&F strategy for next week:

Remain long unless column is reversed. Go for fresh longs on double top buy signal and exit at column reversal. Go short only upon double bottom sell signal.

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, 13 October 2013

Nifty - Point and Figure Analysis

Trade ‘X’. No short Sell unless DB signal is triggered!!

Date: 14^th October 2013

Markets keep making my belief stronger that following the price is much better business than predicting the markets. There are so many factors affecting the price structure and no trader or analyst can track or know all of them. Fortunately, P&F objectivity helps to control such biases and follow what price is doing.

I was bit bearish looking at the resistance but discussed that let price confirm it by changing the column from X to O, which it did not happen. Also discussed that breakout above 5900 will be bullish and negate the downtrend. Double Top Buy signal in High Low chart is generated above 5960.

Charts and analysis:

Figure 1 displays daily candlestick chart of Nifty. Price has formed Hanging man candlestick pattern near horizontal resistance line. This indicates possibility of reversal or change in trend. Figure 2 is 10 box P&F chart plotted with closing prices. Chart shows that ‘Opposing poles’ bullish pattern is been formed because of High pole (bearish) pattern that is been followed by low pole (bullish) pattern. Figure 3 is 10 box P&F chart plotted with high low prices. Double top above 5900 has formed mini bottom and activated the count direction of 6430.

Trend and count direction is up and price is at resistance. We shall not trade negative column reversal now because price is above bearish resistance line. Wait for double bottom sell signal for price to confirm the resistance.

P&F strategy for next week:

Wait for double bottom sell signal to trade short. Buy formation of ‘X’ from here with aggressive stoploss (column reversal).

Figure 1: Nifty Daily Candlestick 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

Sunday, 6 October 2013

Nifty - Point and Figure Analysis

Sell at column reversal! 5900 important level!

Date: 7^th October 2013

Price declined earlier during the week and rallied latter. The reversal or column of ‘X’ was discussed in last week write up. Given resistance levels are seen on Friday.

But as said, I don’t know if price will respect this resistance zone or it has something else in store. Let the column reverse to know the resistance level.

Charts and analysis:

Figure 1 is 10 box chart plotted with closing prices and 6% bands of 10 day SMA. Price has rejected the upper band and trading near significant resistance. Figure 2 is chart plotted with high - low prices and shows anchor point levels in Nifty. Recent high and low box values are exactly between those anchor point bands. Breakout or rejection needs confirmation by formation of basic P&F patterns.

Notice the figure 3. It displays subjective trend lines on 1 column SMA on 10 box chart plotted with closing prices. 1 period average is simply a midpoint level of every column. Such trend line analysis helps in removing the noise and analysing a trend of column reversal. Chart also shows the Fib retracement levels.

Downside counts are dominating and trend is down. This downtrend gets negated if price trades above bearish resistance objective line. A breakout (Double top buy) signal above 5900 will confirm this breach and negate the downtrend. Hence the 5900 level on closing basis is important and strategy needs to be formed around that level.

P&F strategy for next week:

Go short at first formation of ‘O’ from here with stoploss placed at Double top buy signal. This would be a trade with tight stoploss. Apply aggressive exit (column reversal) if that reversal is above 5900. Double top buy signal above 5900 is a breakout above bullish support line hence should be taken.

In simple words, Set up is still negative but sustenance or breakout above 5900 levels will make downtrend weak. Breakout in P&F charting is simple Double top buy and Double bottom sell signal.

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 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, 29 September 2013

Nifty - Point and Figure Analysis

5500 activated! Sell at breakout, sell at resistance!

Date: 30^th September 2013

No trade is triggered during the week except at the Friday close that has generated Double Bottom Sell signal to confirm the supply zone.

Most of the things about resistance zone were explained during last week write up along with chart showing anchor point set up. High pole pattern is formed in charts plotted with closing prices (Figure 1) and with high – low method (Figure 2). Subsequent double bottom sell signal cannot be missed.

Price is near anchor point support zone. And set up is negative!! 3 box reversal chart suggests price target of 5180 and the one who is not trading it for long will immediately quote it. Figure 3 is 2 box reversal high low P&F chart of Nifty. I use this chart whenever long column ‘O’ is formed from which vertical count is to be taken. Counts from this chart tend to work better and doesn't exaggerate. Past instances can be examined in the figure shown with counts. Hence I believe 5500 would be the first level to watch from here.

A corrective ‘X’ is possible due to long column of ‘O’ and a support zone. Long column of ‘O’ in simple words is 280 points drop from recent high without 30 points reversal on closing basis. I would be more comfortable to sell at fresh formation of ‘O’ from here after the corrective column of ‘X’.

Resistance zone is around 5920 – 5950 levels. But only reversal can confirm the resistance hence sell at fresh formation of ‘O’.

Setup is clear. Signal to sell is already triggered, sell more at next formation of ‘O’. Stoploss should be placed at Double Top buy signal. Double top buy signal above 5900 should be taken for long.

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 2 HL Point and Figure Chart

- Prashant Shah, CMT, CFTe

Sunday, 22 September 2013

Let price confirm if this is a Supply zone!

Let price confirm if this is a Supply zone!

Date: 23^rd September 2013

P&F (following only price) remove the noises and I mean it. Noise is external and internal as well. There is so much that is been talked about markets and setup that may result in over analysis which is a disease. We need to create our island for not listening to others and our ‘gut feelings’ but to follow what price does.

I mentioned during last week write up that sideways are expected and P&F can help in trading them. First three days were sideways. P&F double top signal occurred on last Thursday and column reversal exit on Friday. Gap up made us enter at higher prices but that trade should have been taken because we decided aggressive exit at column reversal which triggered during next day.

I have been saying that price is near resistance since two weeks now. I am lucky to have understood that trading such assumptions is a dangerous business. Figure 2 is 10 box chart plotted with High low prices. High Pole bearish pattern is formed and we need double bottom sell signal from here to trade it. Figure 3 is a picture of Anchor Point set up. I apply anchor point from significant pivots to plot the levels of demand and supply zone. Price is trading at supply zone at the moment and all it need is Double bottom sell signal to confirm the supply.

Hence Double bottom signal from here should be traded that needs aggressive exit. Why aggressive exit? First sell signal in Bull set up should be ignored. But we will take it due to other confirmations with column reversal as exit point. Subsequent Double bottom sell signals can be taken with regular exit. Any Double Top signal occurred above 5900 should be taken. Signal above 5900 because that will confirm the breach of bearish objective line drawn from previous high box value of 6180 formed in the month of May 2013.

In brief, follow Double top signal only if it is occurred above 5900. And follow first double bottom sell signal from here with exit at column reversal (formation of ‘X’). No entry at column reversals.

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 3 cl P&F chart showing Anchor Point set up

- Prashant Shah

Sunday, 15 September 2013

Sideways expected, P&F offers clear rules to trade!

Sideways expected, P&F offers clear rules to trade!

Date: 16^th September 2013

Nifty has seen massive recovery from the recent swing low and trending up at the moment. Notice in Figure 1 and 2 that 45 degree bearish trend lines and anchor point supply zone are forming the resistance for the prices from here. The gap between moving averages and momentum indicators in daily bar chart signals the trend extension that shall be followed by change in trend.

Figure 3 is 10 box chart plotted with 5% MA envelopes to 5 column SMA. Trading well above upper band shows the strength in the trend but this might also act as a significant resistance unless bearish objective lines (A) are beaten.

So should I sell at resistance zone when medium to long term trend of Nifty is down? It will also generate an affordable trading opportunity with small stoploss, isn't it? It can never be the affordable trading setup to sell the price that is going up. Questioning the price is a dangerous business.

I felt that Nifty is trading near resistance during last week also but no sell signal is generated in P&F till date! I expect some sideways trend but P&F is making life very simple here. Need tight exit in long (column reversal) due to trend extension. No column reversal because one (up) trend is dominating at the moment. And double bottom sell signal to be taken because price is trading near resistance.

In brief, No column reversal to be traded for entries. Trade Double Top Buy signal if that occurs but with stoploss placed at column reversal, that will ensure early exit if trend reverses. Don’t miss the Double Bottom sell signal if that occurs. No trade unless any of these conditions are met.

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 3 cl P&F chart with 5,5 MA envelopes

- Prashant Shah