Sunday, October 9, 2011

Technical Analysis for Nifty

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 .

Conclusions :

- 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 !!!



mridul said...

thanks RVEEEEE for clear picture as we are also confused in falling wedge and ending diagonal theories.

vj said...

Thanks AARVEE :)

AAR VEE said...

@ Mridul

Thanks for the comment. Try trading the prices mentioned rather than any particular theory.

AAR VEE said...

@ Vj


Sandeep said...


I am a Fan Follower of this blog. Since you hv limited your view to weekly basis, I desperately wait for ur analysis in the weekends.

ThanQ for making us understand to pick the Right views out the Illusive views.



AAR VEE said...


My Blog has analysis from the start targetting the Weekly TF with updates if reqd. in between.

Thanks for following it.


jagannathan said...

Every week you are doing a very easy and clear picture of nifty.Thank you very much for your sincere service.

AAR VEE said...

@ Jagannathan ,

Thanks for being a regular visitor of the Blog . Your commenting with encouragement is appreciated.


Vishal Kataria said...

Great analysis AAR VEE... Can we use the trendline also to decide what is the ideal price to buy a stock (so that its not overpriced)? Any suggestions for spot calls in the cash market (individual stocks and not the NIFTY on the whole)?

AAR VEE said...

@Vishal ,

Trendlines are what their name indicates ,they signal about a trend in the TF its drawn. Joining the higher lows shows an uptrend and supports thereof similarly joining the lower highs shows the downtrend and resistances. Break of a trendline signals a change in the trend and can be used for breakout trading.They can be used for all assest class that can be charted.

I track and trade only Nifty.


AAR VEE said...



mridul said...

thanks.R VEEE..even i was surprised to see the rupee weakness and nifty up..revarsal why because as per my views we have not tasted the low for the year and waiting for that....welcome 5th which is still pending.

mridul said...

even i questioned to jn on 10/11 pre market for the bullish wedge formation..but could not get reply .because if we made a line from two bottoms than a triangle forms and not the wedge and 4933 as a trading breakout and not the revarsal ans only break above 5168 the starting of 4th crossed than the .new.upmove can be...i m still a learner and that too 3 months old in ew...sorry if mistakes are there

bizagra said...

dear aarvee, plz give updated counts..thanks

jagannathan said...

as suggested by you ns went up 5136 and returned.Hats off.I dont know whether it will come down or once again it will go up after touching 5000.Please guide

AAR VEE said...


EW is quite subjective with many valid alternatives. One should know the point of invalidation of the count to trade it.

AAR VEE said...


Updated EW count suggests the wave 4 still on ,trading in its last leg C .This C may be currently in its 4th wave. Its likely to make a falt correction in 4th wave in 3-3-5 subwave and end slightly above the wave A of it i.e. beyond 5168 ,may be below 5225.

There is also a valid probability of this C extending to C=1.62A ,then it will go to fill the gap till 5325.

AAR VEE said...

@ Jagannathan -

EW suggests a probabilty of correction till 5040 and below to 4980 , and then it may go higher again to teast the previous top near 5168 and above that.(probably next week )


bizagra said...

Thanks Aarvee.