Nifty - Point and Figure Analysis

Sunday, 23 February 2014

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.

Sunday, 16 February 2014

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

Sunday, 9 February 2014

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

Sunday, 2 February 2014

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

Sunday, 26 January 2014

Nifty P&F analysis: ‘X’ is being rejected. ‘O’ eager to become a trend!!

‘X’ is being rejected. ‘O’ eager to become a trend!!
Date: 27^th January 2014

Nifty traded above 6330 during last week to trigger the stop of earlier trade. I thought my assumption is going wrong but another ‘O’ is formed on Friday near resistance levels to generate the sell signal again.

Chart analysis:

Figure 1 is 10 box value chart plotted with closing prices. Price touched the box value of 6350 during last week that generated the Double top buy signal above upper band and above bullish line. This was a bullish formation and triggered the stop for shorts. As discussed during earlier post, Long formations were to ignore for a while being Nifty trading at resistance. Column reversed to ‘O’ on Friday again from the band resistance levels. It would be a classical bull trap formation if Nifty closes below 6260 from here.

Figure 2 is 10 box value chart plotted with High Low prices. Price turned to negative column at upper band in this chart as well. Bearish Bull trap formation in this chart will be formed if price trades below 6240. Anchor support point levels are around 6180. I would like to monitor price at those levels. Support also gives opportunity to trade short when set up is negative. Double bottom sell signal below them is a delight.

Figure 3 is Weekly candlestick chart of Nifty. Bearish engulfing and shooting star formation in the weekly chart were discussed during the last post. The Doji formation of current week which is nearly a Gravestone Doji is formed at same levels. This indicates the consistent supply at higher levels and certainly not the good news for the bulls.

I have been discussing the bearish setup since last two weeks but it is my assumption based on the price behavior at resistance levels. Trend is more of sideways at the moment. Double bottom sell signal below 6200 will turn intermediate trend to down. Price trading below 6100 will be very bearish event and activate some more downside counts based on 1 box chart analysis. I shall present the chart explaining the setup if that happens.

‘X’ is being rejected consistently by the supply at higher levels. Current formation of ‘O’ has strengthened my bearish view. I am looking for 5800 but would not like to remain short above 6350 or any double top formation when it is trading above bullish line. Looking at current setup, I feel that ‘O’ has never been such a mouth watering.

P&F strategy for next week:

Remain short and trade ‘O’s unless price trading above 6350.

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 Weekly Candlestick Chart

- Prashant Shah, CMT, CFTe

Sunday, 19 January 2014

Nifty P&F analysis: Nifty at resistance! ‘O’ remain exciting!!

Nifty at resistance! ‘O’ remain exciting!!
Date: 20^th January 2014

Nifty bounced from support level of 6170 to test 6340+ levels during last week to close near 6260 on Friday. P&F chart column has turned to ‘O’ on Friday that has triggered the short trade with stoploss of four boxes.

Chart analysis:

As mentioned during last post, I am anticipating lower levels going forward. There are benefits of attaching methods to anticipation or analysis. As explained, I wanted ‘O’ to arrive for trading short which happened on Friday that generated the trade. And due to this I have not been shorting the price that is going up but shorted it when it stopped going up and with logical stop in place.

Figure 1 is 10 box chart plotted with closing prices. Price witnessed sharp bounce from support levels and tested the Upper Bollinger Band. Colum turning to ‘O’ from upper band confirms the resistance and indicates some downside even if it has to remain sideways for a while.

Figure 2 is 10 box chart plotted with High Low prices. Price tested the Upper Bollinger Band in this chart as well. Shrinking band indicates price squeeze and some indecision or uncertainty that is prevailing in the market at the moment. Bull Trap bearish signal will be generated below 6230 in this chart hence this level becomes important.

Figure 3 is Weekly candlestick chart of Nifty. Last week candle is a bearish shooting star that has occurred near levels of Bearish Engulfing pattern that was formed 2 weeks before (Both are circled in the chart). This indicates some supply that is coming at higher levels and possibility of downside in the prices going forward.

Overall setup is negative and there are some confirmations as well. But shrinking bands are indicating range that is becoming narrower and trend is more of sideways at the moment. Breach of 6230 will strengthen the bearish view. Price is trading above bullish objective line at the moment hence I would like to treat 6330 as a reversal level. One should not remain short above the same.

P&F strategy for next week:

Trade ‘O’s and trade Double Bottom sell signals unless price trading above 6330.

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 Weekly Candlestick Chart

- Prashant Shah, CMT, CFTe

Sunday, 12 January 2014

Nifty Point and Figure Analysis: Nifty seems set for 5850. ‘O’ is a friend!!

Nifty seems set for 5850. ‘O’ is a friend!!
Date: 13^th January 2014

It is been a lackluster week with range bound moves and consolidating bars.

Chart analysis:

Figure 1 is 10 box chart plotted with closing prices. Not much has happened in this chart since last week. Price has remained in the same column of ‘O’ and currently trading at the previous column support level. Fib level and Anchor Points indicate important support levels at 6100 – 6070. Price is currently testing the bullish internal support line.

Figure 2 is 10 box chart plotted with High Low prices. Recent formation of small columns indicates price consolidation which has resulted in trendline breach. Double bottom sell signal below 20 column average line and recent internal line is a bearish event. Downside vertical count of 5850 plotted from recent high of 6350 has got activated. A vertical count of 5570 from the box high of 6410 occurred during earlier December has also got activated. But first task of that count and a horizontal count indicates possibility of levels around 5800.

Figure 3 is 1 box reversal chart of box value 10. Breach of OSB pattern described in the earlier post has proved to be the important information. I have always observed that breach of weak breakout level (pattern failure?) works well. Process of following price is easier said than done. I do it with P&F method of analysis where I seek price confirmation to all sorts of news and assumptions.

Supports exist around 6130 and 6070 levels. But setup is bearish and I expect price to see 5850. Support level needs price confirmation that happens when follow up buying occurs after the bounce. Hence Double Top buy signal is important logical setup.

P&F strategy for next week:

A bounce or column of ‘X’ from here is an opportunity to trade short. When setup is bearish, negative column reversal can also be a price confirmation to the resistance. Hence I would recommend to trade occurrence of fresh ‘O’ from here.

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 cl Point and Figure Chart

- Prashant Shah, CMT, CFTe