Monday, January 18, 2016

Nifty & Bank Nifty: Predicting crucial levels using Channel intersection technique!

Importance of Channel intersection: During times of high volatility and extreme sentiments the most reliable technique that comes handy is the Channeling method. The weekly chart of Nifty shows two different channel intersections near the zone of 7250 – 7300. Intersection of trendlines are very important zone and becomes all the more relevant when it connects two different cycles. We can see that the support area as per the upward sloping blue channel which connected the euphoric rise of 2014 is near 7200. On the other hand, red downward sloping channel connects the cycle of correction of 2015. Interestingly the support of this channel is now near 7300 and to add importance to it both of these important trendlines is intersecting near 7250. This gives lot of objectivity and the worst case scenario analysis for the current trend. Existing shorts can ………..

Nifty weekly chart:

Applying channel to leading sector – Bank Nifty: The sector that is leading the fall is Bank Nifty. The daily chart of Bank Nifty shows parallel lines connecting the tops and the lows. We can clearly see that prices are now approaching near the lower trendline of the channel with the support zone lying near 14700 – 15000 mark. We are now close to these levels and this week is going to be crucial. But please understand this doesn’t mean one should start creating long positions at current levels.

Bank Nifty daily chart:

Unless we see a base formation with strong positive close and faster retracement above the last falling segment it is prudent to avoid catching a falling knife and allowing the market to decide its low levels.

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  1. hi, you have been predicting a bottom for sometime now but market seems to have different ideas

  2. Market reversed from the zone as showed on above charts.