Nifty futures had done a interesting activity on the daily charts. If you observed the historical daily charts of nifty futures you would have noticed that in the last three months 8580 zone is whipsawed multiple times (12 trading sessions in last 4 months) and whenever price approaches 8580 price made a pullback and buying behavior happens.
So does it mean 8580 zone is a support zone?
In a classical technical analysis it means price respected 8580 zone multiple times and hence the becomes the support. If you would drawn a trendline it would have broken yesterday as shown above and hence the broken support becomes the resistance zone now (Not sure who written this dumb rule).
In reality when 8580 is respected multiple times then it means many participants are valuing as a fair place to get a trade and buyers show some interest at those price zone. If those zone got broken again and if the buying activity resume on the second day and let say the price is above 8580 then it still means buyers are interested in those zone.
Remember you are not the only one watching the supports/resistance, trendline breakout almost everyone watches the same movie! And if the price gets defends 8580 and still sellers are willing to take control then you can see the price moving down further. When we put such nonsensical rules and market reverses against our opinion you mind could not make it rightly aligned with the market direction and ends up trading against the trend.
Moral of the Story : And support is not a support and neither a resistance is nor a resistance. Supports/Resistance are meant to be tested.
[wp_ad_camp_5]
