Nifty Update:
This update is being given as technically one good indication has happened which is very good news for years of bulls as per point and figure charting. Point and Figure (PF) charting is the oldest method of charting which clearly gives the shift of the market from bulls to bears and vice versa. One of the important aspects of PF is that it takes into account only the price and nothing else. Then you might be wondering why price only? As it is the only thing which is true in the market. The movement of price during the day, month or week would clearly indicate whether bulls are gaining upper hand or bears. PF captures only the fight between bulls and bears and this system gives very early signal of the market even ahead of other technical charts, like OHLC, Candle stick etc.,. I have been following the same for the last few months intraday, weekly and monthly and the results are seen to be believed. It gave very early signals of shift from bull to bear and also bear to bull.
Here below I would present the picture as per PF in daily, weekly and monthly.
In the above chart 3 box reversal is taken into account with each box 25 points.As per the daily chart above nifty has just broken above the “Triple Top” formation in PF parlance which is a very bullish signal this Triple top break out has happened once it moved above 5200. This is very bullish signal and it has very good upside potential and the price objective as per this break out works out to around 5800 levels. There for in my view the bulls are holding fort as of now and if 5200 is held successfully during this week I am of the opinion that the market might move very swiftly from current levels. So don’t be surprised if market moves up. In weekly and monthly charts also equally strong bullish break out has happened which are discussed below.
Weekly Chart:
In this chart also 3 box reversals is taken into account with each box 25 points. In this also nifty has broken above the “Triple Top formation” as per PF parlance. The pattern was formed over a period of three months. The” break out” out of the triple top formation is very bullish sign and we may not be surprised if the nifty zooms from the current levels. As I have indicated earlier PF give early signal of trend reversal, on weekly charts I has given the signs of bullishness building up in the market when it went above 5125 in second half of November and also when it went past 5125 in first week of December and it has confirmed the same by staying above it for whole of the month. Nifty has broken above what we call the “Bearish Resistance Line” (BRL) drawn at an angle of 45% from the top of January 2008. The break of the BRL market a significant event in the PF parlance, as the break of the same would indicate that the bulls are more stronger than any period after January 2008. So till the nifty trades above the bearish resistance line which appears to be at around 5000 levels there is not problem for bulls and I might not be surprised if market zooms from the current levels surprising every body.
Monthly Chart:
In monthly chart also we have taken 3 box reversal principles with each box consisting of 300 points. Hear also one of the bullish patterns Break out has happened. Nifty has broken above the “Double Top” (DT) pattern as per PF parlance. Break out of Double top pattern in monthly chart indicates a huge strength for the bulls in the last two years when ever double top or double top break out has happened nifty has on an average moved around 500 to 600 points. In this case the break out has happened on close above 5100 in the month of December 2009. And confirmed the same by staying above it thereafter. Here if history has to be considered nifty has to move by atleast 500 to 600 points from 5100 there for giving a minimum target of 5600 to 5700 for nifty. Another significant thing has happened along with the DT break out it has broken above the “Bearish Resistance Line”(BRL) which is shown clearly in the chart above. The break of the BRL indicates that bulls are at strongest point after January 2008. Till that BRL is not violated market might just zoom from the current levels. The BRL in monthly chart is also at 5000 levels.
The point and figure charting is giving different dimension for the market. In all the above cases it can be seen that PF has given early signs of reversal and we can be first into the market when every body is guessing on which direction the market would move. The PF charts are clearly indicating bulls are in full control of the market and any minor fall should be followed by huge rises. So as far as PF charting is considered its giving a bullish sign for the market when all the pointing towards doubts on the market.
Caution: once the “Bearish resistance” lines are taken out the trend would reverse. The BRL is at 5000 for both weekly and monthly charts. So till the market sustains above it no problem for bulls. Wait for weekly close of nifty below 5000 levels for trend reversal at this point of time.
So you know what to do now.
M.Sri Mahidar
Trend is friend
Wednesday, 6th January 2010, 17.34 IST
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