As chart shown above, Nifty has made the following technical patterns:
1. Double top;
2. CUP pattern; and
3. At its resistance at 17233.
Let understand the meaning of the aforementioned technical patterns:
1. Double Top - A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset's price falls below a support level equal to the low between the two prior high.
Comments: in this practical world, there are chances that the nifty will correct and show a reversal.
2. CUP and Handle pattern - As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right-hand side and the handle is formed.
Comments: Normally alone cup pattern is not seen in practical world. In my experience, I have always seen a handle with cup pattern. So since there is no handle as of now, there might be a change that we see some correction in form of a handle and hence, this cup pattern is also bearish for Nifty 50.
3. Support and Resistance - a) Resistance is something which stops the price from rising further. The resistance level is a price point on the chart where traders expect maximum supply (in terms of selling) for the stock/index. The resistance level is always above the current market price. b) support is something that prevents the price from falling further. The support level is a price point on the chart where the trader expects maximum demand (in terms of buying) coming into the stock/index. Whenever the price falls to the support line, it is likely to bounce back. The support level is always below the current market price.
Conclusion: In my limited understanding, since there is double top, incomplete cup patter (as now handle will be form) and Nifty is at its resistance. Hence, It appears that Nifty will fall and correct. The good immediate for Nifty 50 would be 17100.
PS: Kindly discuss with your financial advisor before taking any trade in Nifty 50. This analysis is to discuss the price and pattern of indexes and stocks.
1. Double top;
2. CUP pattern; and
3. At its resistance at 17233.
Let understand the meaning of the aforementioned technical patterns:
1. Double Top - A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset's price falls below a support level equal to the low between the two prior high.
Comments: in this practical world, there are chances that the nifty will correct and show a reversal.
2. CUP and Handle pattern - As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right-hand side and the handle is formed.
Comments: Normally alone cup pattern is not seen in practical world. In my experience, I have always seen a handle with cup pattern. So since there is no handle as of now, there might be a change that we see some correction in form of a handle and hence, this cup pattern is also bearish for Nifty 50.
3. Support and Resistance - a) Resistance is something which stops the price from rising further. The resistance level is a price point on the chart where traders expect maximum supply (in terms of selling) for the stock/index. The resistance level is always above the current market price. b) support is something that prevents the price from falling further. The support level is a price point on the chart where the trader expects maximum demand (in terms of buying) coming into the stock/index. Whenever the price falls to the support line, it is likely to bounce back. The support level is always below the current market price.
Conclusion: In my limited understanding, since there is double top, incomplete cup patter (as now handle will be form) and Nifty is at its resistance. Hence, It appears that Nifty will fall and correct. The good immediate for Nifty 50 would be 17100.
PS: Kindly discuss with your financial advisor before taking any trade in Nifty 50. This analysis is to discuss the price and pattern of indexes and stocks.