NIFTY trading using Gaps and Patterns - Near term outlook

The classical basics of technical analysis concepts still do add value if one is grounded and have discipline in their investments or trading.

The NIFTY took a support at 5100 - 5150 odd levels and bounced from intraday lows and closed @ 5285. From 5118 CNX NIFTY has moved to 6142 odd levels. In the process perfectly 3 gaps occurred: A Breakaway Gap (BG), Runaway Gap (RG) and finally an Exhaustion Gap (EG), which occurred on the day which US federal reserve delayed tapering of Quantitative easing (QE) on 19th September 2013 by reaching above 6100 which was also an inverted H & S  pattern targets as shown in the chart below. 

The day after 20th September 2013 the gap was closed confirming an Exhaustion gap. Another big event triggered the end of the rally as Reserve Bank of India (RBI) increasing the repo rates.

                                                                NIFTY Daily Chart

Now NIFTY is on the verge of a breakdown of Head an shoulders pattern below 5800 and the chart structure looks bleak and bearish for near term with lower targets of 5740 below 5688 - 5600 - 5500.

Trade objectively and wisely with the consideration of own risk with amid volatility. The strategy would be to wait patiently for the right opportunity to unfold to probable profitable trade setups.

Raju V Angadi

Equity Research Analyst

 To know more about probable counts analysis on NIFTY, BANK NIFTY and CNX IT along with 5 stocks for the month check out our newsletters and advisory services contact us back on rvangadi@googlemail.com or swing research5@gmail.com or +91 78291 55900

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Disclaimer: This is just an view based on the research of individual for educational purpose. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in stock markets.