Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Nifty and Head and shoulders

1 min read


 

NIfty CMP : 4352


The head and shoulders pattern is generally regarded as a reversal pattern and it is most often seen in uptrends. It is also most reliable when found in an uptrend as well. Eventually, the market begins to slow down and the forces of supply and demand are generally considered in balance. Sellers come in at the highs (left shoulder) and the downside is probed (beginning neckline.) Buyers soon return to the market and ultimately push through to new highs (head.) However, the new highs are quickly turned back and the downside is tested again (continuing neckline.) Tentative buying re-emerges and the market rallies once more, but fails to take out the previous high. (This last top is considered the right shoulder.) Buying dries up and the market tests the downside yet again. Your trendline for this pattern should be drawn from the beginning neckline to the continuing neckline. (Volume has a greater importance in the head and shoulders pattern in comparison to other patterns. Volume generally follows the price higher on the left shoulder. However, the head is formed on diminished volume indicating the buyers aren’t as aggressive as they once were. And on the last rallying attempt-the left shoulder-volume is even lighter than on the head, signaling that the buyers may have exhausted themselves.) New selling comes in and previous buyers get out. The pattern is complete when the market breaks the neckline. (Volume should increase on the breakout.)

Head and Shoulder Characteristics

A technical analysis term used to describe a chart formation in which a stock's price:

1. Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines.
3. And finally, rises again, but not to the second peak, and declines once more.

The first and third peaks are shoulders, and the second peak forms the head.


Example Chart from Investopedia.com



Nifty Head and shoulders pattern shows a ready made target of 3800 if breaking 4200 in downside
or even lower targets are possible.
Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

NVK Setup – Intraday Trade Setup

NVK Setup is a intraday trade setup which is a popular trade setup among icharts members
Rajandran R
33 sec read

Nifty and BankNifty 90 min charts update for 16th…

Nifty turns to sell mode on 90 min charts with trailing resistance coming near to the 5500. Similarly Bank Nifty too in sell mode...
Rajandran R
10 sec read

Nifty and BankNifty 90 min charts update for 15th…

Nifty turns to buy mode with cloud supports coming near to 5460-5470 zone. And Bank Nifty still in sell mode with resistance near 10900....
Rajandran R
8 sec read

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More