Nifty today closed at ₹9136.85. It opened on a bearish note making a low of ₹9050 but in the second half of trading session market gained and closed significantly higher than the day’s low making a high of ₹9182.40. But today’s low completed a Head & Shoulder pattern on lower time frame as can be seen on the chart 1 and also forming a double bottom pattern (shown with blue arrows on chart 1) at the same time. These two are contrary patterns. Lets analyse each one separately.
If Double Bottom takes control then the level it should break is 9600 or the upper range of channel to achieve the Target of 540 points on the upside.
But If Head & shoulder wins and takes Nifty down then it has to break and sustain below the level of ₹9000. The break of this level may give a fall of 900 points as shown as Target 2 on chart 1 and a minor Target 1 of 540 points.
Now you might think that this will start the bearish trend of Nifty again but Stock market is not as easy as it looks. There are more evidence that supports that if Nifty falls 900 points or 540 points (depending on where it takes support) then it might go up. I am not saying that this will end the bearishness in the market but it might turn bullish for few day. Let me show you one more chart to support this.
Above chart might seem very confusing in the first glance. Don’t worry, I’ll explain it. The pattern that is in pink color is a “possible” Bullish Butterfly Pattern. Why I am saying “possible” because the 4th leg of the pattern is still not complete. But if it has to complete then it should fall down to a level of around ₹8500 (127.2% of the XA wave) and this is our Target 1. Nearby lies a another level around ₹8400 and this is the 61.8% retracement level of the whole big wave (marked with the dotted line). Near ₹8500 lies another level of 314% of the BC wave and 127.2% of ABC projection.
Near target 2 is lies the retracement level 78.6% of the whole wave (dotted line) around ₹8000, 161.8% of the ABC projection around ₹8200 and 161.8% of the XA wave at ₹8200.
I am pretty sure that reading so many levels on a chart you must have not understood much but this the complete analysis of the Nifty chart for the coming week. Let me summaries it with a conclusion for the more better understanding.
If the today’s low is the support and double bottom is going to play its role in the next week then the above analysis may be of no use. BUT if the Nifty breaks ₹9000 level then it might come down to our Target 1 i.e. ₹8500 level and may take support and bounce back. Now if the bears want more then they might pull Nifty even down to Target 2 of around ₹8000-8150 levels and may bounce back from here. If this also breaks then the last hope for the bulls would be ₹7500 level after that they will throw in the towel and Bears will start riding. So coming two weeks are important and needs to a close eye.
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