Sunday, January 15, 2012

Different patterns in the Nifty chart

The end of day chart for the nifty is showing three different patterns, with opposing implications.

First, an ascending triangle in the Nifty has been confirmed when prices broke out above the horizontal resistance at 4800. A pattern target is set at 5070. If this actually does work out then later when stock market history is written, this pattern will be identified as the start of the new bull market. If the pattern fails, then it will be consigned to the dustbin of failed patterns, forgotten.

Second, the current rally in the Nifty is taking the shape of a rising wedge. A rising wedge is a bearish pattern which comes about half way in a downtrend. Assuming the downtrend started from 5100 and continued till 4530, the half way points are 570. Then, a breakdown is the wedge, around 4750 should lead to a decline of 570 points, giving a downside target of 4180.

Third, a symmetrical triangle as broken out on the upside. I am not a fan of this pattern, since it has a large percentage of failure. So, I am not looking at this one.

The question is: will the ascending triangle meet it's target or fail? We will find out in the next few days.


Neeraj Malhotra said...

The momentum indicators on daily and 60 mins charts are indicating a bearish reversal and if we move below Friday's low conclusively then a short term downtrend may start.

Thus my vote is for the second pattern :-)

I also want to ask a question regarding the stop losses.

In your book many a times the stop loss is kept as previous swing low/high depending on long/short position.

My question is, should we consider a intraday breach of stop loss to close the position or should we wait for a confirmed close on EOD charts or something else?

Last Thursday I had a short position on Nifty based on 60 mins chart with a stop of 4890. The Nifty went upto 4898 on Friday and closed around 4866 throwing me out of my position.

Thanks & Regards,

ameet said...

sir..u r great man..ur suggestion in market are very useful to us..atleast me sir..thanks sir

Pi said...

It should come, and probably higher levels too. Brokerages have been coming out with their 2012 targets, and overwhelming majority mention chances of sub 4500 as very high, while most of them also mention year end target as much higher. Highly likely that lower levels will not be reached. Don't know about the resumption of the bull market though. Sincerely hope so, been bidding time and preserving capital since last 18 months, that when the bull mkt starts then there will be money to be made.


Atul Krishna said...

Don't you think that it is time when gaps around 4550-spot should be filled.

Last 3 candles with almost no "Real Body" !!


shabsaif said...

R u sure this time , your bullish call on NIFTY, there is any chances to fail again.

Last many days , you had been speaking on TV that you are bullish, today also again you said "Indian Market outperform"

So when NIFTY will touch 5000 or may be not...please confirm..Thanks

Tomichan said...

swithed from ril 720 put to banknifty 8700 put last week. Today swithed to nifty 4800 put with minor profit.
will be back to master's call if the strategy works in favour of me.

Technotrader said...

Sir Tata Global Nice Inverted H&S pattern breakout today target of 110 stop loss 95. Is it Ok sir?

Tomichan said...

thanx god, i have exited the 4800 put towards the end. Now only 17% of my capital compared to that of jan 3rd remains. Going for tomorrow. It is likely that indias only problem was interest rate hike. Ever since the rbi news regarding rate cut and growth came out, the market declined to decline. Its strange for me atleast. As Buffet said, everyone talking about a decline, the market thinks otherwise? But i am with the bear. If market can go past 5004, the september close in this month, it will be a big news. If closes the month above that, it will be great news for the year. Surely we have to imagine and look at the charts to get a direction. The sentiment analyser? Not VIX. Some other measure master?

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