Textbook Inverse H&S Breakout + Throwback Retest, Bulls Back in The NSE Midcap index (CNXMIDCAP) has completed a textbook Inverse Head & Shoulders pattern—one of the most reliable reversal structures in technical analysis. What makes this setup particularly compelling? Price broke decisively above the neckline, then executed a throwback (breakout retest), confirming the validity of the pattern. This polarity flip—where former resistance transforms into support—offers traders a high-probability, lower-risk entry point.
Pattern Mechanics
The inverse H&S works on a simple principle: after a downtrend exhausts itself (the head), buyers gradually regain control (right shoulder), and the breakout above the neckline signals a trend reversal. The throwback we're seeing now is nature's way of shaking out weak hands before the real move begins.
According to Thomas Bulkowski's extensive pattern research, inverse H&S formations show throwbacks about 65% of the time, and the pattern reaches its measured target roughly 71% of the time. In bull market conditions, the average gain is approximately 45%. Translation: these targets are statistically reasonable, but never guaranteed.
Key Levels & Targets
Based on the pattern structure:
Nec
kline zone: ~59,500 – 60,000
Head low: ~46,500 – 47,000
Pattern height: ~12,500 – 13,500
Price Projections:
T1 (Conservative): ~66,000 – confluence with prior swing supply zone
T2 (Measured Move): ~72,000 – 73,000 – full pattern height added to neckline
Stop Loss / Invalidation:
Aggressive traders: Daily close back below neckline (~59.5k)
Conservative traders: Close below right shoulder swing low
💡 Trading the Setup
While you cannot directly trade the CNXMIDCAP index, this macro structure presents an excellent opportunity for swing trades in individual midcap equity breakouts. When the broader index shows this kind of clean technical setup, individual stocks within the index often follow suit with their own breakout patterns.
Strategy: Scout for midcap stocks that are:
Breaking out of consolidation zones or their own bullish patterns
Showing strong relative strength versus the index
Backed by volume expansion on the breakout
The index-level confirmation acts as a tailwind—use it to identify high-conviction swing setups in constituent stocks with proper risk management.
