NIFTY spot is currently trading at 8703. It has failed to climb above 8850 during 2 consecutive attempts and witnessed a nice sell off yesterday. Index has reversed exactly from 61.8% Fibonacci correction of a bearish swing from 9119.20 to 8269.15 triggering possibilities of AB=CD pattern in line with a probable head and shoulder reversal pattern. It has already completed leg ABC legs of AB=CD pattern and now leg D is due out that completes near 7994.75 zones. Potential head and shoulder pattern has a down sloping neckline and down sloping necklines has more significance than normal one. Failure of neckline is also occurs around 8000-7990 zones and decisive closes below those levels may bring a larger degree correction in market. Stochastic had also reached in extreme overbought territory and formed a bearish cross that is also supportive for short term bears. Currently nifty has strong resistance at 8850 any recovery above that level may help this index to move towards 8937-9000 zones. Stability above 8950 zones will invalidate our bearish expectations. Immediate support is now seen near 8690 and failure of this level will open the doors for 8520-8500 zones. Areas of 8500 may provide good support b’coz of availability of Fibonacci price cluster and rising trend line support. Stability below 8500 will increase the odds for a retest to 8260-8000 zones.
As per chart and explanations above traders can use jumps around 8800-8850 as selling opportunity with stop loss of 8950 for targeting 8550-8300-8000.
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