The above Picture was received in a forwarded mail asking to read the word in this picture. Try doing it. You may be able to read a word in it. Try focusing more ,You will find two words in it , 'Illusion' in Blue landscape and 'Optical' in the Yellow.
Similar is the reading of Charts , we tend to see what we believe. But trading it stubbornly can be harmful for the Capital , instead we try to objectively analyze and get some conclusions that should be traded with Flexibility.
1. Indicators :
Analyzing the Indicator signals in three time frames as in charts below , the Hourly , Daily and Weekly , we find that -
- Hourly gave a Positive Diversion and has reached the Overbought zone but the Prices made a lower High doing so .
- Daily Indicator is just moving up from Oversold almost signalling a Buy. The Resistance comes at Mid Bollinger Band of 20dma at 4960 and Support at Lower B.B. at 4740 .
- The Higher TF of Weekly is a clear Sell . The Support comes of Lower B.B. at 4650.
Ideally all the rallies may get sold into till a strong Weekly close happens on upside.
2. Trendlines and Patterns :
Nifty is trading in a Rangebound zone making Lower High Pivots between the Trendlines shown in the Chart below.
The Triangle Pattern got broken down in Daily charts and is now Trading in a Wedge Pattern .
The break of Trendlines on either side will give a short trem Trending move.
3. Moving Averages :
The 5 Week ema chart is an interesting one and cuts the noise of the volatile rangebound Daily chart . It shows a clear three week Uptrend followed by a couple of weeks of rangebound movement which has turned to a downtrend in last three weeks .
Now a close above 4950 will signal a short term reversal on the upside and a close below 4800 may signal further trending downside.
4. Volume Profile :
To fine tune the Levels in conjunction with Volumes ,
the 10d Volume Profile suggests a break of Range on a close above 4950 on Upside and that below 4850 for the Downside.
5. Elliott Wave Analysis :
Further to the Basic counts in the Long Term Post . The chart below shows two alternate counts in Blue and Red . Blue is preferable now and shows a likely start of subwave 3 of wave 5 ( of C-Y) .
The likely immediateTarget for it is 4450-4530 levels.The Preferable count gets invalidated on trade above 5035 Spot price .
- 4850-4950 is a No Trade zone.
- High Probability of a Breakout move above / below this Range.
- Bias remains Down till closes above 4950 .
- Above 4950 will target 5060 and then will try to fill the gap upto 5124.
- Below 4850 will target 4800 , 4740 , 4650 and 4530.
- Caution against a whipsaw of the range boundaries. ( say a trading /close above 4950 but back in range to break the lower end or viceversa )
- Markets might just be holding out before the start of the Results season next week.
The Analysis concludes that Bias is Down , but rather than Trading this Belief blindly, it will be prudent to trade the Prices objectively.
Wanna try out once more . Try reading the word in the picture below . Got one , try again .
It has two words in it. ' Good ' in Black , enveloping 'Evil' in White .
Now on seeing the picture again it looks quite obvious , which always will be the case seeing the Charts in the hindsight .
Happy Trading !!!