DushyantAM

Nifty50 is showing signs of exhaustion

Short
NSE:NIFTY   Nifty 50 Index
Fuel seems to be drying out of the Corona recovery rally. Every consecutive jump is smaller than the previous, and the most recent jumps are in 5% range. It is likely that the Nifty50 will plateau at 11300, and fall from there to 10600 (or lower), as marked.

Possibility of a big correction remains until the index decisively breaks out of the narrowing channel that ends on 19th October. That period also happens to be closer to US elections, where if Trump starts losing; then American markets would stop holding up.

Action: Short sell below 11150, target: 10600. Potential gains: 5%. Stop loss: 11300
Technically, the triangle should have a flat top or bottom or be symmetric; however, I have applied the same concept to show the support/resistance basically. It will be interesting to see whether bears win or bulls, in this narrow range. There may be a false breakout on the resistance line, before the hell breaks loose.
Comment: As per comments from amol_tamhane_1978 and the article at https://www.investopedia.com/articles/tr... this is a rising wedge.

Possible target according to the article is 8800-9400, with potential gains of 15-20%. A fall in volume of trades is necessary before putting money behind the prediction. Volume data is not available on this site. According to NSE website, the volumes have gone up by 10%; but started to plateau. I'll keep updating this space.
Trade active: The support has been breached, and the position is now active with a target @ 10600 / 9400. Stop loss at 11300.

Usually, wedge targets are achieved within a few hours of the breach. Expect a closure by Tuesday.
Trade closed: stop reached: Stop loss was reached yesterday, and today's opening is completely inside the wedge again. I am hopeful of another breach, as volumes are far below those in May/June. The alternate explanation is that the formation is a retracement (aiming for 100% retracement to 12300 by mid-October) and not a wedge.