Monday, September 19, 2011

Some days are dull - that's fine

The markets are becoming dull, and that should be fine with traders. Every day is not expected to come with fireworks. The Nifty is in a trading range - I am looking at 4900 to 5150 as the range boundary. As time goes by, new patterns will emerge and trades will come. But for the past two adys, it has been relatively calm - very little trading. This includes Gold and Silver, where I have not identified any pattern. So, it is quite for me.

I had given a chart for a bullish head and shoulder pattern. Sasi asks "what will be the target on the downside for a failed bullish head and shoulder pattern".

My Notes: Please remember that this pattern has not been confirmed yet. Confirmation comes on a close above 5165 approx. A failure of the pattern will come in only after the pattern is confirmed. If there is no pattern, then, there will be no failure - nothing to fail. Assuming that the Nifty closes above 5165 and the pattern is confirmed, when will the failure occur? When prices move below the right shoulder - around 4900. There are no rules for setting targets for failed patterns except that a strong move may be expected in the opposite direction. A minimum move should be the difference between neckline and right shoulder, 5165 - 4900 = 265 points giving 4635 as a target.


Balu said...


very useful explanation sir.. thankful to you for this kind of knowledge i think fresh sell has been triggered for a target of 4910.. but this kind of 2 day 3 day trends are really frustrating sir.. what can we do sir..just wait and watch only..


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