Saturday, September 5, 2009

Nifty Futures Analysis on Daily Chart

Dear Readers,
Today I am posing my views on Nifty Futures based on Daily Chart (EOD). This is after a considerably long time when I posted my analysis, partly because I was busy doing other things and partly because I did not find such interesting formation to share.

Coming to the point straightaway, let me start with trendlines - Following is the Daily Chart of Nifty Future (Linear) and it show a rising uptrend line holding since March lows:

The interesting thing is if we switch to log charts, then this trendline was violated (downwards) in mid-august and since then acted as resistance. However, the resistance was not that strong and my conclusion is this trendline looks not very valid in order to guide us for any meaningful trade.

The Ascending Triangle:
The most important thing that took my attention is the development of an Ascending Triangle pattern on Daily Chart. Let us first have a look:

Now, this pattern is identical on both linear as well as log chart and the implication is - if it manages to get through above 4770 with good volumes and stay there then according to Ascending Triangle pattern 5500 - 5600 is there as target! Falling below 4500 (volume not important) will mean this pattern is failed. Let us see what's in store in near future.

Failing Patterns are in Vogue:
Having written the above views about a possible Ascending Trianlge, I must remind my dear readers that patterns are not fool-proof and can fail. Recently there were two big patterns that failed miserably! First, there was a Head and Shoulders pattern, which, after breaking the neckline failed. Then, there developed an Inverse Head and Shoulders pattern and it too failed well after breaking neckline!!! Please see the following chart:

So, as we can see clearly that in the recent past we witnessed failure of big promising patterns, we must always remember that patterns can fail at times. If this pattern does give a breakout, we should never think that now the target is there for sure. Like what happened with H&S and Inv H&S, it can also show a false breakout, so keep your stops properly.

Happy Trading...


  1. hi harish bhai... after a long long time getting ur analysis.. thanks :)

  2. Hi Saurabh Bhai (BHAI ;-) ),

    kaise ho? suna hai aajkal Maafia bane ho :) lekin bhai mere blog ko FB ke networked blog pe follow nahi kiya aapne...


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