Sunday, July 12, 2009

Nifty head & shoulder and how to play it..

Last week, I discussed various markets and developing H&S patterns across a range of markets. During the course of last week, all of these signals were confirmed (Although S&P 500 futures have not closed below their left shoulder for 2 days in a row - something which I always look for).

Coming back to Nifty this week, we have our own home grown version of head & shoulder as shown below. As we can see - the formation has been confirmed by two successive closes below the upward sloping neck-line. The first partial target is at 3765, and the final target taken in the traditional manner is at around 3600. The first big resistance is at the low of left shoulder - which comes in at 3515.25. Second major resistance comes in at the neck-line itself. In case we break up without doing even the partial target - then the big resistance can be expected at 4335-4340. I have put down all this on the chart itself to make it clearer. As usual - all the best for your trading this week.