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Many of our students trade the Indian stock index known as the ‘Nifty’. The Nifty is a futures contract traded on the National Stock Exchange of India (NSE) and has a separate contract each month of the year. It has a tick size of 0.05, which is worth 5 Paise. 100 Paise makes one Indian Rupee. Chart 1 reveals the Nifty is approaching a potential triple top on the weekly chart, at just past a 100% of the first range out from June this year. This market has been trending upwards since June and may well continue that trend after a small pullback. Chart 1: Nifty-Spot1 Weekly Bar Chart with Ranges Resistance Card
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The All-Time-Ranges card on the monthly chart shows a major double top pattern occurred in January, 2008 and November, 2010. We saw falls into December, 2011 and now the smaller double top pattern (triple if you include July, 2011) is showing at around 87.5% of this range. Chart 2: Nifty-Spot1 Monthly Bar Chart with Double Top Pattern
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Putting ABCs over the double tops on the monthly chart (as shown in Chart 3) indicates that the Nifty has not yet reached the 50% milestone and as such is not looking very good for that bigger picture short setup. If the current double top scenario is taken out, then perhaps a challenge to the All-Time-High is possible. Alternatively, if this double top plays out, then some strong short trades are quite possible. Chart 3: Nifty-Spot1 Monthly Bar Chart with Big Picture ABC
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On the smaller picture, the last two weekly swing ranges have both reached 100% and the market gapped up into them. Could this be an ‘exhaust gap’? Are we likely to see the market gap back down and create an ‘island reversal’? Chart 4: Nifty-Spot1 Daily Bar Chart with Weekly ABCs
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When trading the Nifty, you need to be aware that it trades on more than one exchange. For example, the charts in ProfitSource are based on the NSE (India) futures contract, while some brokers only have the SGX (Singapore) contract. There will be differences in the time and price, so make sure you know which contract your broker is offering.
This is merely the beginning of analysis for the Nifty. To more fully investigate whether this market has further to fall, you might like to lay on some time analysis and perhaps look at anniversaries and Time by Degrees. If you are looking for another market to make your own, this is one that holds great potential for tradeable turns in the short term.
It’s the Journey
Lauren Jones
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