In our previous post on Steidlmayer distribution, we had made a point that step 3 of the process was over and ” the market is on the verge of a large move”.
The point made about step 4 was ” usually from the Point of Control of the completed distribution, a new IPM forms that either moves in the original direction or accepts above 50% of the IPM ( Initial price movement) range”
This week we saw a move from the Point of control of the b shaped profile, signaling the start of the new IPM, but for the conservative profiler, the final closing of the week was within the previous bell shaped curve and still within 50 % of the previous IPM range of 5550-5971.
Have a look :
Chart of NF April
For the New IPM, we had remarked that it should ideally begin with a trend day and take out the previous balance zone. We have seen evidence of a double distribution. which is a trending type of day in the markets and usually a signal for follow up action. Aggressive profilers would confirm the DD as a signal that we are in a new IPM which should challenge levels of 6090 next in the futures.
However as remarked in the comments section, the conservative player would wait for the previous balance zone to be taken out to confirm the new activity. We have a high-volume-node ( HVN) at 5946 levels and once that is taken out on closing basis, the stage will be set for the move to 6090 NF.
If however the market is in a mood to scale back, the 5808 on the lower side should not be violated. However only a break of 5733 from the b shaped profile will turn the sentiment bearish for the short term.
Looking forward to next week, we have options expiration as well as earning season underway. An options expiration by itself involves large inventory adjustments by market participants which gives the market added volatility. We have already seen reactions to Infy Numbers create panic in long inventory positions and it will be interesting to see the market’s response to RIL numbers.
So with the markets at the top of it’s recent trading range and a double dose of volatility in expiration and earnings, we have some interesting times ahead.