Nifty - Possible Scenarios and Various Head & Shoulder Patterns
The Head & Shoulders Pattern forming on Nifty is pretty much visible to everyone. But there are various possible scenarios on where Nifty could turn more bearish or bullish in next 1-2 weeks.
Scenario 1: -
Nifty could immediately turn from tomorrow onwards as there is a convergence of the neckline drawn from the close price of 20 Dec, close of 14th feb and low of 15th Feb. One could argue that the neckline could be drawn with a straight zone between 16800-16850 and I would agree which I have shown in the other scenarios below.
As shown in Exhibit 1 below, the neckline drawn this way has multiple touch points across various tops formed going back to 2016. Also in its favour is the 200 SMA converging at 16913 and Call OI as expected is very strong at 17000. This would lead me to believe Nifty could possibly reverse from 16900-16950 levels and we have to follow price action this week to confirm that.
Exhibit 1: -
Scenario 2: -
As shown in Exhibit 2, looking at the weekly chart it is quite clear that Nifty has found a strong support zone around 16800-16850 levels. There is no doubt that this zone will provide a stiff resistance and this week's candle would be a possible retest of this zone and Nifty would continue its downward momentum from next week. The height of head from neckline would be around 1500 points (from 18350 to 16850) giving a target of 15350. Realistically though assuming neckline could be at 17000 as well 15700 would be a good target.
Exhibit 2: -
Scenario 3
One can look at weekly line chart wherein H&S pattern is pretty clear but the neckline drawn would be different and pathway that Nifty could take is a upmove towards 17200 and if Nifty is able to close above 17200 in that scenario Nifty would be very bullish from that level possibly rising to 18000 in no time.
Key takeaways: -
1. This and probably next week's price action could decide Nifty's fate for a while. Personally I believe the confluence of the neckline joining the tops and SMA 200 at a key level of 16913 would be a very stiff resistance to cross.
2. Nifty could retest 17000 as that could be the neckline and weekly close above that level would turn the scenario bullish.
3. From the line chart, I would still wait for Nifty to close atleast on a daily timeframe above 17200 for confirmation of further bullishness.
Note: - Exhibit links shown in comments as dont have PRO membership to post links in Ideas :(
Scenario 1: -
Nifty could immediately turn from tomorrow onwards as there is a convergence of the neckline drawn from the close price of 20 Dec, close of 14th feb and low of 15th Feb. One could argue that the neckline could be drawn with a straight zone between 16800-16850 and I would agree which I have shown in the other scenarios below.
As shown in Exhibit 1 below, the neckline drawn this way has multiple touch points across various tops formed going back to 2016. Also in its favour is the 200 SMA converging at 16913 and Call OI as expected is very strong at 17000. This would lead me to believe Nifty could possibly reverse from 16900-16950 levels and we have to follow price action this week to confirm that.
Exhibit 1: -
Scenario 2: -
As shown in Exhibit 2, looking at the weekly chart it is quite clear that Nifty has found a strong support zone around 16800-16850 levels. There is no doubt that this zone will provide a stiff resistance and this week's candle would be a possible retest of this zone and Nifty would continue its downward momentum from next week. The height of head from neckline would be around 1500 points (from 18350 to 16850) giving a target of 15350. Realistically though assuming neckline could be at 17000 as well 15700 would be a good target.
Exhibit 2: -
Scenario 3
One can look at weekly line chart wherein H&S pattern is pretty clear but the neckline drawn would be different and pathway that Nifty could take is a upmove towards 17200 and if Nifty is able to close above 17200 in that scenario Nifty would be very bullish from that level possibly rising to 18000 in no time.
Key takeaways: -
1. This and probably next week's price action could decide Nifty's fate for a while. Personally I believe the confluence of the neckline joining the tops and SMA 200 at a key level of 16913 would be a very stiff resistance to cross.
2. Nifty could retest 17000 as that could be the neckline and weekly close above that level would turn the scenario bullish.
3. From the line chart, I would still wait for Nifty to close atleast on a daily timeframe above 17200 for confirmation of further bullishness.
Note: - Exhibit links shown in comments as dont have PRO membership to post links in Ideas :(
Comment:
Forgot to mention about RSI in Exhibit 2, even the RSI is forming an H&S pattern and currently weekly is below 50. Expecting it to retest and stay below 50 and then continue downward movement.