Nifty Point & Figure (PnF) Analysis - Week 201129 - 1203

Weekly Chart:

Daily Chart:

Hourly Chart:

Summary:

All three DOWN. Weekly target intact 5500. Daily & Hourly strong resistance 5940.

Nifty Point & Figure (PnF) Analysis - Week 201122 - 1126

Weekly Chart

Daily Chart

Hourly Chart

Summary

All three DOWN. Weekly support deep at 5500! Daily & Hourly immediate support 5810 - 5820. Resistance to bounce back 5960 - 5980.

PnF Chart My 0.2 Cent Review - Part II (A)

In the introductory part, so far we have seen why and why not PnF. Let me recapitulate the same again.
Why -

• Simple
• Less technology and technical involved
• Less whipsaws as in-built filter exists
• Recommended for medium to long-term investment analysis

Why not - 

• Short-term analysis difficult
• No time-frame can be theoretically associated with this method
• Leverage positions are difficult to manage without deep pocket

In-spite of that, I have been trying to analyze 'Nifty' through this method for last few quarters.I would say, I have been 60-70 % successful in this attempt. While in Jul'10 - Sep'10, Nifty played prolonged range bound movement of some mere 200 points and was finding difficult to break past 5550, in one of those analysis my chart reading suggested 5800. (http://niftypointandfigure.blogspot.com/2010/09/nifty-point-figure-pnf-analysis-week.html). Almost nobody talked about 250 points break-out at that point. I too was skeptical, but the chart reading suggested so. I shall show in following discussions, what made me say so! All this I am saying is to advocate that a simple chart reading mechanism like PnF can also be immensely helpful - only thing those 30% failure should not embroil us into negative thinking and discard the mechanism. Well enough advocacy, let's get onto the tough act - Understand, Analyze and Act.

Understand

In this section we will understand the philosophy under which it came into picture. But before this it's worth to thank those great people who gave birth to and nurtured such a wonderful system. A little about them.

Read History section in this link: http://en.wikipedia.org/wiki/Point_and_figure_chart

The way I see it is a bit different than what most of the vanilla literature talk about it. It's a chart of pure price movement in two directions - either UP or DOWN. There is nothing else in it. Unlike other charts - line, bar, candle it does not change the directions immediately. Market to me is just like a School class room without a teacher. It's in utter chaos, you can't hear anybody nobody can hear you and it goes on but there is so much noise. The noise often comes out of class room walls but students almost never. But when the teacher comes in, almost everything is in order! The teacher is the fundamental and the class are us the market players.

This PnF method, therefore, tries to elevate the market from a School class room to a College class room. Where it incorporates a discipline and puts a tolerance limit beyond which only the participants will react. It forces us to be disciplined and not get swayed in absence of fundamental clarity. So how does it do all these philosophical talk?

Chart Construct

The chart is constructed with four components:

1. Graph sheet
2. Two symbols - X (for UP) & O (for DOWN)
3. Daily data with Open, High, Low & Close (High & Low are must)
4. A buffer figure - Block size (Chart Sensitivity) * Reversal (Noise Filter)

One logic:

• If current symbol is X --> 

1. Check New High > Last High + Block Size --> Plot one more X on top of last X else
2. Check New Low < Last High - Buffer --> Plot one O at new block position

The same logic applies when the current symbol is O.
So, we see Open and Close prices are of no use except for some overlay on the chart itself.
Concept
Buffer figure: Block size * Reversal
Let's take an example here.

Quick Tips:
The moment a PnF chart is flashed, we need to see one thing first - Construct, i.e. Block Size = 1, Reversal = Can not be ascertained from this chart (assume 3)


Now coming back to the example. This chart shows that the down trend is on. Current price is within 11 to 13 (assuming 3 point reversal).
Say, next day the H-L is 14 - 10. So what do we do next? Though there was test of high but the rule of the chart will ignore this as a noise and go ahead and put one "O" at 10! Now practically, if somebody observes the day movement and if the movement has been from 'High to Low', the chart's point of view is valid as the upside movement can be considered as 'noise'. However if it happened from 'Low to High', then this is not valid. But if up trend continues, next day the chart will anyway change column from "O" to "X".

So block size and reversal are two very important concept in this. Trend increases the price by incremental block and reversal happens beyond certain level of price point and not at every fluctuation.

In the next part of the we will straightway enter the analysis part and shall try to spend maximum time in analyzing several real-life charts.

Nifty Point & Figure (PnF) Analysis - Week 201114 - 1118

Weekly Analysis:

Daily Analysis:

Hourly Analysis:

Summary:

Weekly still limited to Correction. 5900 break will target 5500.
Daily Chart is in DOWN mode, 5900 - 5940 support.
Hourly chart nearing (6013) a bounce zone, 6150 - 6170 should be the resistance zone for the bounce back.

Nifty Point & Figure (PnF) Analysis - Week 201107 - 1111

Some Recaps:

I fear whether this sounds retro and boastful. However, the intention is to show that almost all the methods that the great chartists and technicians have put to use over time, hold some value even today; it's upto us to salvage them. Not following any other technical indicator and only PnF chart, I was able to read that 5940 will be the final support even two weeks before and recommended buying equities. Last week also the chart read that if 6180 taken, 6220 will also be taken.

The only problem I find in my reading that when I try to do too many things, it gets biased! I hope I get rid of the problem soon.

I have started scribing the details in the chart itself. Hope, this will be more meaningful as at the same time the chart and the write-up can be referred.

Weekly Chart:

Daily Chart:

Hourly Chart:

Summary:

Hourly & Daily chart have broken the down channel and is in expansion mode. Resistance is not established as of now. Support lying in the zone 6220 - 6240.
Weekly chart wants to set in new territory!

Some Diwali Wishes

Wish all a very happy, peaceful and prosperous Diwali.

Thought of mining some charts and of-course the special treasure-hunt "Reliance"! Charts are self-explanatory. Unfortunately or fortunately, PnF knows only one thing - price! No indicator, no time. Act as per price. Simple ... :)

INDIAINFO

KOTAKBANK

ABIRLANUVO

RELIANCE

Unitech Analysis

Daily Chart of Unitech:

Considering lots interest floating around the Unitech, thought of putting up PnF view point of the daily chart. The details are explained in the Chart itself.