In a nutshell, Nifty is flirting around the important Gann level of 15190. A decisive weekly close above 15250 giving some leeway will indicate a resumption of the positive trend.
Nifty has reversed sharply post the Budget. But see Gann levels that worked so extremely well in providing support and resistance to prices.
See the below chart that shows the classic price action area along with an Expanding pattern. The low created just before the Budget day was near to the Gann support of 13748 levels.
Nifty Gann square of 9 & Megaphone pattern
Gann Square of 9
The above chart shows how precisely the Nifty50 has been moving within the price action areas as marked by Gann square of 9. Prices have been finding support and resistance between the levels marked on the chart.
The earlier high that the Nifty made was near 14,753 and the Gann level marked was at 14,702 in our monthly research. Remember these levels give the area or the zone of reversals and can never be exact pinpoint.
Post reversal, prices broke 14221 and then sharply moved towards the lower Gann level near 13748 marked on the chart.
The recent rise has now taken out 14702 on the upside decisively and is now crossing the next level of 15,190. As per price action levels derived using Gann method it will be important to see if Nifty can sustain above 15190 on the weekly close which will later result into next level to open up.
We are not suggesting that prices will go there but if at all it moves there we know the probable area of reversal or a pause.
A decisive reversal back below the level of 15190 will indicate prices are finding resistance near this zone and we can expect consolidation to take place. This way one can combine simply Gann methods along with the price pattern structure.
Megaphone pattern:
We can see a contracting and an Expanding pattern from the lows that is in Neo wave a running Diametric pattern.
The above research shows how we can combine simple methods and derive the broader context of the market and this when combined with signalling system can give a classic entry and exit strategy.
In a nutshell, Nifty is flirting around the important Gann level of 15190. A decisive weekly close above 15250 giving some leeway will indicate a resumption of the positive trend on the upside towards the resistance trendline whereas if we see nervousness back below 14950 – 15000 psychological level that will suggest markets are tiring out and index is running out of steam.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Ashish Kyal is Founder of wavesstrategy.com and Trading Gurukul. Follow on Twitter @kyalashish and YouTube channel @kyalashish
