Nifty had done a “W” shaped price pattern so far during Nov 2016 to till date which is very much visual from the charts. Currently price is trading around the Intermediate resistance zone 8315 levels as Sentimental RSI is currently at the extreme. Previous Top Down Analysis indicates that still price is showing a consolidation pattern in both Daily and Weekly Charts.
All right, its time to tackle some important questions and controversies. Do cycles exist in financial markets? Even if they exist, can we trade them profitably? Perhaps it’s often debated only on first scale and completely ignored on second scale basis. Let me take a dip into the topic and some insights alongside.
Recently, Indian govt announced a particular scheme in their budget notes which took a lot of attention, especially gold merchants and speculators. With gold prices tumbling since last couple of years, the new scheme-if it works, would not only increase the supply of precious metal at domestic level, in-turn cuts our international gold imports which further depresses the price at global scale.
Banknifty future from chart above looks like making a head and shoulder formation which is in its last leg of forming the right shoulder (which it should, to become a valid pattern). As per the chart above 19450 is tough line of resistance for bulls only once this level is sustained close basis the next up leg shall begin, till that the bank nifty is sell on rally and around 19000 there is a strong support from where it becomes a buy towards this resistance again.
Yeah, if you believe that I am good at writing controversial articles, I can’t say no. But while doing so, I try to expose real face of the markets and some of the most used conventional wisdom which is nothing but just a useless trap. Today let me stir a bit on Chart patterns and why the so-called “Patterns” are useless to make money. Before doing so I would like to warn the average reader that chart patterns are useful only if you’re making money out of it or else throw them away.
If you are a regular reader of my articles, then you know “I hate technical indicators”. They are a derivative of price action, nothing more than a mathematical complex paralysis. My clients frequently question me-“Hey do you use any indicator”? Most probably my reply will be no-because majority of you guys know, I am a pure Price action trader!
Dow Theory is one of the most important trend following theories ever. As market evolved, the concepts of Technical analysis became more elaborated and complex, most essential foundation was forgotten in the Market literature.Even with much complexity nothing beats the Dow Theory on odds and logic. It’s around for over 100 years and still important as it is, even today
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If Nifty Future remains below 8295 Future level the bears are in control and market is weak for more correction. The supports at 8180 and 8060 the upside potential will open up once nifty future sustains above 8295 this will make bears exit the shorts and above 8370 we expect a big rally again to begin.