Dean Market Profile

Thursday, May 30, 2013

Nifty, Banknifty, Infy - Technical Update

Dean Market Profile Banknifty , Elliott Wave

Possible HnS marked on the chart.

Possible HnS marked on the chart.

Possible HnS marked on the chart.

This is not a post to tout another trading opportunity, but if you can squeeze one out of it, good for you. This is just an interesting observation, lets see how.

As with every trader, I have my ways of identifying possible supply and demand zones in the markets, and the above charts are examples of 3 markets which according to my analysis, MAY be at or near a supply zone. Now this is exactly what as a trader I am on the lookout for, a possible supply and demand zone, and a good clear CTA pattern with clear entry and invalidation objectives.

If this supply zone plays out, then these small HnS patterns could be the ones, which will prove to be the exact entry point in to the markets, of course if we trade above the top of the head, this pattern invalidates and so will be my supply zone. Then I will have to get back to the drawing board I guess.

Soybean - Elliott Wave Update

Dean Market Profile Commodities , Soybean

Soybean futures are at a crucial juncture.
We saw a stupendous rally last year, and prices touched a high around 5000.
We are back to the time (sowing season) when there is a supply crunch in the markets and the demand is high.
Technically speaking, we have a sharp 5 wave rally last year wave [3], preceded by a 5 wave move wave [1], and also followed by a possible 5 wave move in wave [5].
Of this latest 5 wave move, we have waves (1)-(2)-(3) done, wave (4) is in progress, and hopefully wave (5) should follow.
Ideally prices should go above the top of wave [3], atleast close to it.
So once this correction in wave (4) is done, which I feel is quite close to finishing, we should see prices rising.
Whether we take out the previous high, or fall short of it, I cant tell now, but we should surely get a tradable up move in coming months.

Nifty - Technical Update

Dean Market Profile Elliott Wave , Indices

Prices broke down from the lower channel line of a broadening triangle.
Now pulling back, the interesting thing to watch is whether prices find resistance at the lower channel boundary.
A nice reward to risk short trade can be taken here, with SL above the lower channel boundary.
If prices find resistance then we are in for even lower prices.

Nifty - Technical Update

Dean Market Profile Elliott Wave , Indices

Nifty has reversed from an important resistance zone.
Prices have met with supply in this zone twice before this weeks price action.
Big bearish engulfings, have resulted in sustained down moves, and this time time too it may turn out to be the same.
Since this is the turning point, understandably, people, traders, investors are torn between bullish and bearish arguments, and, interestingly both would be equally impressive at this juncture.
But a big bearish engulfing in an establshed supply zone, with RSI -ve divergence and higher prices with falling volume, all indicate towards at least a temporary top in place.
The rising wedge is unmistakable and so would be the aftermath, if it plays out.
I would again like to state the obvious, that, should prices resume their upmove and take out the supply zone marked in the chart above, we should see even higher prices.

Crude - Technical Update

Dean Market Profile Commodities , Crude

This is the daily chart of Crude, my earlier view of a three wave move was falsified (refer last post here), but we got another bearish formation in the bargain, perhaps with a more severe reaction to follow.
We are forming a rising wedge, and though we momentarily shot over the resistance zone, we are promptly back below it.
So far the rises were fast and corrections were slow, but if this were to reverse that is if falls start taking lesser time compared to upward corrections, we may as well conclude, that a down move is beginning.

The triangle on the weekly chart is still in contention.
Prices were beautifully resisted at the upper TL of the triangle.
Now if we do not BO above the upper TL soon, we may test the lower boundary of the triangle.

Rcom - Technical Update

Dean Market Profile Rcom , Stocks

RCOM has a resistance zone in the 113-131 band.
Volumes are rising, should be indicative of a bottoming formation.
The sharp rise in RSI above the OB zone suggests a possible fundamental shift from a bearish to bullish view.
But the current OB condition should delay the eventual BO.
I don't understand the business of RCOM, but since the name Reliance features in the company title, I believe a BO should result in a sustained move.

Dow Jones, Dollar Index - Technical Update

Dean Market Profile Currencies , Dollar Index

This is the chart for Dow Jones showing the last rally since 2009. We have broken into new high grounds, but certain points need to be pondered over.
Thought the rally is looking strong, it is still contained within parallel lines, and that tells us that this price action is still in the corrective realm.
Prices are approaching the top boundary of the corrective channel, at the same time RSI is in OB zone, getting resisted at the previous peak in RSI, giving rise to a sort of negative divergence.
Most obviously the last peak around 14200 odd levels, becomes the key level, should we break below it, we can call at least a short term correction to this rally, if not the start of a new bear market.
In lieu of gathering more evidence supporting our view, I have attached chart of Dollar Index below, which makes some startling revelations for us.

The whole correction post the rapid fall from 2002 - 2005, so far looks like a rounding bottom to me on this monthly chart of DI. We had earlier proposed a view that this correction is a pause in the existing downtrend, and is taking the shape of a triangle, refer here.
But some new developments warn us against such a possibility.
We can see that, Prices have been getting resisted at the falling trendline (blue color), and also making higher lows, at the same time.
But the interesting thing is that similar pattern is forming in RSI, and RSI has given an advance BO above its own falling TL, more often than not prices follow suit.
So if DI is giving us a BO above a multi year TL, then surely this will not augur well for the equities, aka DJIA.

So my final word on it is, should we get a BO in DI, then we are in for a turbulent times in equities, and economy in general.

USDINR - Technical Update

Dean Market Profile Currencies , Elliott Wave

Rising wedge in USDINR.
Bullish in medium term, and bearish in long term.
There are many alternate possibilities, but prices should test the A-C trendline, before anything else!

Idea - Technical Update

Dean Market Profile Idea , Stocks

Possible HnS in Idea, a smaller hns in the right shoulder as well.
A BD below the NL should give a tradable move into this expiry.
A very good Reward to Risk ratio trade, with an obvious SL above the high of the smaller head at 132.70.

DLF - Technical Update

Dean Market Profile DLF , Stocks

DLF got resisted in the zone we mentioned a couple of days back, refer last post here.
Now the question is will the support zone of 230-225 hold the prices this time.
If the correction is done, then the support should give way, otherwise we might find support in this zone once again.

Silver - Elliott Wave Update

Dean Market Profile Commodities , Silver

Silver had a stupendous run, and everybody's aware of it.
Many are now feeling sour as Silver did not reach the moon (as promised by brokers, advisers, et all), and they are stuck with long (even worse physical Silver) positions, very close to the moon. The only problem is, prices are closer to earth and are coming further down.
But is there a structure to this down move, and to the upmove that preceded, well fortunately there is, and that might help us realize where exactly are we in the big picture, and where shall we get an opportunity to reduce our holdings (and pain) at a better price.
We are in a corrective counter trend move (as EWP suggests us), and though the correction may not be over, it will certainly give us upward spurts in prices, to lighten our holdings. So when do we know that there is a spurt coming, well whenever the prices complete a clean 3 wave corrective move, we will get an upward spurt.
Is there a chance like it on the horizon? Well we cant be certain about it (for that matter about anything) but we can surely put odds in our favor a little bit just at the right time, by using EWP.
We are in an [a]-[b]-[c] downmove, and the wave [c] as always consists of 5 waves.
We are currently in wave (3) of [c] which means there is some more downside before we complete this wave [c]. So far as this wave [c] is incomplete, any bounce we might get will be promptly sold into.
I can identify some support zones on the chart, where Silver might find some demand.
We are currently in one such area between 41875-40000, below 40000 though the next area of support comes around 33900-31600. Also notice the lower boundary of the falling channel.
All these observations suggests that one should not hurry to jump on the long side, wait for the prices to complete their course, show signs of reversing at important support zones, and then buy. Till then enjoy the toboggan ride!

DLF, Reliance - Technical Update

Dean Market Profile DLF , Reliance

Above is a daily chart for DLF, the counter has spiked perfectly in the resistance zone, refer previous post here.
We may see prices traveling all the way down to the lower band of this trading range.
One may notice a peculiar pattern in the RSI indicator.

Reliance is looking like it has managed a corrective rally, I had pointed out that prices may trudge higher (refer previous post here), but now the pattern looks complete.
Also one might notice that this complete rally looks like it is a part of the right shoulder of a big HnS pattern.
If this is true, then we are in for an immediate downmove till the NL, and below which we may see prices falling even further.

Nifty - Elliott Wave Update

Dean Market Profile Elliott Wave , Indices

Nifty is now in a precarious zone. I was hoping for a new high.
But prices have completed the minimum requirement for an ED, and this pattern is usually followed by a sudden and abrupt reversals.
The longs should be trailed with close stops, so long as we are not in an uncharted territory, once at an all time high, we can do nothing but follow the prices.
Volumes are falling continuously, so traders and investors alike, should be on their toes.

Nifty - Elliott Wave Update

Dean Market Profile Elliott Wave , Indices

Just a thought, about this rally in Nifty.
Please remember, this is not a recommendation or trade idea.
I was just trying to count the waves on this Nifty rally, and I could find 3 legitimate possibilities.
One calls for a start of a medium term down move, one calls for a pause, and last one calls for continuation of this up move even further up. The possibilities are marked on the chart with appropriate labels (are open for discussion).
This is an ideal time to tighten stops, a few counters are showing patterns with bearish implications, but one should not trade against the trend, let the markets tip their hand.
Till then either watch from the sidelines, or trail your long positions.

ITC - Elliott Wave Update

Dean Market Profile ITC , Stocks

Read our last post on ITC here, called for a min move to 350, and good possibility of exceeding it.
ITC has moved above 350 like a hot knife through butter, but how long will this rally continue?
Well we do not get such potent "combination EW patterns" like "double flat" often, this pattern generally precedes strong rallies, and one such rally in ITC, may have just begun.
We will get short term pauses from time to time, but the trend in this counter may remain up for a while.

USDINR - Technical Update

Dean Market Profile Currencies , Elliott Wave

What does a trader want? Not that difficult a question, I presume, for his chart patterns to work. Wont it be a perfect world if the chart patterns worked out really well every time, I doubt!
If the patterns did work every time, there would be no fun in the markets, so this uncertainty is what breeds creativity in the mind of a trader, which he clearly takes too far at times, :)
But yesterdays strong rally in USDINR, brought me back to the two head and shoulder patterns we are tracking in this pair.
The bigger one of course if plays out, will prove to be a consolidation pattern to a the entire rally from the lows of 44 on USDINR.
The entire right shoulder of this bigger HnS is itself turning out to be a smaller hns.
A BO from these two NLs (red and green), could well be the trigger for a much bigger rally. The targets for these two head and shoulder patterns itself come in the range of 57 and 59.
Now if this pattern was a pause for the rally which started from 44 levels, we are looking at much higher levels than the targets for head and shoulder patterns developing.
But all said and done, we need to break out of the resistance zone, which contains many important fibonacci relationships as well as the two NLs. The zone ranges for 55.14 to 55.37 odd levels.
For traders working with intraday fractal, may already be long, and should trail there stops, those looking for long term trades and using weekly and daily fractals, should wait for this zone to be overcome, before committing serious capital.

Crude - Technical Update

Dean Market Profile Commodities , Crude

Crude rallied since its bottom in April, and it is looking like a 3 wave move.
Prices have reached into the resistance band.
Also the last leg of this rally is accompanied with falling volume, suggesting falling trust of market participants in higher crude prices.
A short trade on crude would be prudent in the resistance zone marked on the chart, with a SL above last pivot high. If the risk in this trade is looking too much, then one can wait for the prices to turn down, and then look for a low risk entry into the trend, this second option would be safer than the first.

Reliance - Technical Update

Dean Market Profile Reliance , Stocks

Reliance did bounce back and our call for patience paid off well, read last post here.
Reliance did rally, but the rally stopped in the resistance zone (green lines) marked on the chart, the pullback is now in the support zone (blue lines).
I feel this counter should trade in this band (green - blue lines), form a base, and then launch atleast another rally.
The rising trendline which was tested earlier, should hold the key, if broken, this whole price action since 11 April can be termed corrective, but above this trendline, hopes for an up move are intact.
No need to mention that above the resistance zone prices should move up with little resistance.
Below the rising TL preceding downtrend may resume.

Nifty - Elliott Wave Update

Dean Market Profile Elliott Wave , Indices

I am trying to count either a triple three or an ending diagonal on Nifty, marked with appropriate labels on the chart.
The target for this possibly last leg of this pattern should be the last high around 6338.50.
And as regards the pattern which this last wave may take, it should mock the wave [a].
So though I am expecting a short term pause before we strike 6340 odd levels, I would not dare the price, its better to follow it until there are clear signs of trend stalling or reversing.

SBI - Technical Update

Dean Market Profile SBIN , Stocks

Please refer our last post on SBI here, we called for a stall in the rapid rise in prices, thats exactly what we got, (I am not taking any credit for it, EWP helps us anticipate, and some luck wont hurt).
Now we got the pause, which went into its thrid week, and we are moving up again, a classic 5 - 3 - 5 pattern, may be unfolding.
On a larger fractal, in the chart above, we can see, SBI is forming a rising wedge, which needs its last leg to complete. That's the larger picture we are playing with.
Lets look at the details of this pattern.

We can count a corrective pattern in the latest fall from the resistance zone marked on the chart, registering a low at 2183.
RSI is getting supported at 50 level.
We might see prices rising to the earlier resistance zone 2365-2325. If we take out this resistance zone, we might be in for a bigger move towards 2550.
As long as prices are closing above the short term EMA (red color), the prices may continue to climb.

DLF - Technical Update

Dean Market Profile DLF , Stocks

The whole point of technical analysis is to find low risk opportunities to profit from.
Now there is no one single thing or person which can tell us when it is the right time to buy or sell a stock. But we can gather enough evidence for a possibility if we use the right tools the RIGHT way!
So what do we have on our hand in DLF. First of all I am not sure where this counter is headed, up or down, but that cannot stop us from exploiting a good trading opportunity, lets gather the "evidence" now.
The weekly chart above romances the possibility of a Cup and Handle bottoming pattern.
The later part of the saucer pattern takes the shape of a triangle, which broke out on 14th Jan and got resisted at the 200 WEMA. The breakout have since then, consolidated and is testing the upper channel boundary of the triangle, just where the triangle boundaries are intersecting.
The volume also shows favorable characteristic for a bottom.

The daily chart sports two recognizable patterns, one completed and another in process.
The first is a rising wedge, which was followed by a sharp fall. The sharp fall has now halted at an important support zone (fibo confluence zone).
The important question is what is in store next.
There is a triangle forming just above the support zone, which has held the prices twice before, and we are currently testing the same support zone again.
Now what makes this price juncture interesting, is its proximity to the important support zone. A bullish position at this juncture, would be a low risk bet, and a breakdown below this important support zone will be a clear signal for a bigger fall.
The OS RSI reading on the daily chart suggests a bounce, all we have to do now is to watch our trading systems closely for a signal. above the support zone, I would take all buy signals, and if prices trade below it, I would like to play this counter from the sell side.

Important point here is that I have tried to delineate the bullish and bearish zone for this counter. A trader should benefit in a way, that, he can confidently trust buy signals in bull zone, and sell signals in bear zone, with tight and clear risk management.

ITC - Elliott Wave Update

Dean Market Profile ITC , Stocks

ITC has been sporting a rare EW pattern, a double flat.
Now this whole pattern may be looked at just as a rectangular correction, with minimum breakout expectation of around 350.
But if we count it as a double flat, then we have a correction pattern which suggests tremendous upward price potential, on our hand.
This counter has been in a secular uptrend, and this pattern only adds to the strength of this bull move.
I would watch 350 odd level for a pause, another corrective pattern, albeit on smaller degree, and then resumption of this up move again above 350.

Crudeoil - Technical Update

Dean Market Profile Commodities , Crude

Crude is trading in a broad range of 5500 - 4600 for more than a year now (shown in the weekly chart below).
What more, that this consolidation is taking a shape of a triangular contraction.
Again, when we have such kind of price patterns, we need to exercise patience, and play the ping pong game with the markets.
There was a sharp fall in first half of April and then an equally sharp recovery. This recovery is looking very much like a 3 wave pattern.
I have marked possible resistance zone on the charts, between 5275 - 5230, this zone is a result of a fibonacci confluence zone, and has high probability of effecting a reversal.
As an EWP (Elliott Wave Principle) and CTA (Classical Technical Analysis) practitioner, I am always on the look out for price zones where I can place myself against the consensus with least possible amount of risk. Coz, crowds are often wrong at price extremes during consolidations.

Nifty - Elliott Wave Update

Dean Market Profile Elliott Wave , Indices

This is a 120 min Nifty chart. A clear 5 wave impulse pattern can be observed on the chart.
EWP tells us that a 5 wave move always occur in the direction of the main trend.
This is the first of this up move, which suggests there should be another one. But before that we will have to endure a corrective move against the trend.
Its not certain that Nifty will turn down right from this level, but there is a high probability of a pause here.
I have marked sequential target levels for this possible downmove. Any level may hold, and this correction should take atleast 2 days to complete, else it will be considered as a part of existing up move, i.e. wave (a) as per our count.
My suggestion is to bide your time for a while, let this pause complete, and position yourself in the meanwhile for the next leg to follow.

Reliance - Technical Update

Dean Market Profile Reliance , Stocks

Still not lost hope on an upmove in Reliance. Refer my last update here.
We have important resistance zones overhead, marked on the chart.
Need a strong break out above these levels to confirm a healthy up move.

USDINR - Technical Update

Dean Market Profile Currencies , Elliott Wave

We have discussed this pattern earlier in one of our updates on USDINR (please refer here).
As soon as we get perilously close to one of the boundaries of this triangular contraction, and everything suggests that a breakout or breakdown may be in the offing, prices suddenly reverse and meander around hopelessly, dashing all hopes of a much anticipated trending move.
That's the character of a consolidation, much worse a coiling pattern.
But every time we get a bounce off the pattern boundaries, what we actually have is addition to the already long list of frustrated BO/BD traders. This frustration and eventual trapping of one set of players is what gives the boost to the legitimate breakout or breakdown.
Once again instead of talking about levels, I would advise patience, we may be very close to the resolution of this long coiling pattern.
Remember the BO would be obvious, and there would be plenty of opportunities to enter the trend, and the trend would be large enough to make good amount of money.

Thursday, May 30, 2013

Tuesday, May 28, 2013

Monday, May 27, 2013

Friday, May 24, 2013

Thursday, May 23, 2013

Wednesday, May 22, 2013

Tuesday, May 21, 2013

Monday, May 20, 2013

Friday, May 17, 2013

Saturday, May 11, 2013

Friday, May 10, 2013

Wednesday, May 08, 2013

Tuesday, May 07, 2013

Monday, May 06, 2013

Saturday, May 04, 2013

Friday, May 03, 2013

Thursday, May 02, 2013

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