Only trouble is that there are resistance levels sitting at 4600 and 4700.
In fact the daily charts - not shown here - suggests that the last swing high was at 4600 - therefore, there is a possibility that Nifty may turn back and reenter the trading range.
At range bound times like this a weekly picture is helpful. The we months weekly chart is shown here ( click on it to get a bigger view).
Several things marked on the chart are clear:
1 There are two rectangle box formations - the one at the bottom lasted 6 months. The one at the top is still forming and is about 4 months old - and may have another month or so to go. Notice the phrase MAY HAVE - this implies it can break out this week also.
However, if Nifty does reverse from 4600, then clearly the box may stretch out. The bottom line is that the rectangle box formation at the top is not complete yet and is worth watching out.
2. Equally important - the rectangular box at the top is actually not yet a rectangle in price formation but is an ascending TRIANGLE. If it breaks out above its range, it will be explosive, but that is a BIG IF. I also think that reversing from 4600 might negate the triangle - so this and the next week may be a decider on the triangle.
3. What if the market reverses from 4600 / 4700 renteres the rectangle? What if after another two months, price actions falls below the bottom of the rectangle? Two months is a long way - but if it does happens, it will probably mean that the up move is over for the next six months!!!! It might mean moving into cash at that time. Mind you, this is just a scenario planning and no action needed now except to keep this possibility in mind and keep observing.
All this confusion seems to be affecting swing and positional traders. Overall for day traders, despite a bit of volatility, reasonable amount of daytrading set ups have been available so far. and even in the days price actions, watch out for the resistatance and support. Stay away from initiating position if you are unsure - and in fact assume that you are wrong and enter into the trader only if you can tolerate the loss in case your are wrong.
Happy trading and watch out for these traingles and rectangles .....
If you have any comments please write to me at stockmarket.methods.in.madness@gmail.com
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Disclaimer: The above analysis is just that - my analysis. If you choose to trade on the basis of this analysis, you will be solely responsible for the outcome of the trade - profit or loss. Please keep in mind that trading and in particular day trading is not for the novice and there is significant risk of loss of capital in trading
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