Nifty: Power of channel

Nifty Weekly Chart

In the above chart, Nifty is moving precisely in the rising blue channel. However, historically it is proved that whenever, the index reaches near to the resistance of the channel it has reversed and bounced from the support of the channel ( marked by arrows).

In the recent encounter, Nifty crossed the resistance of the channel but from past two weeks prices dragged the index lower, thus re-entering it in the channel. This can also be termed as failed pattern. A failed pattern, is when prices gives a bullish or bearish break but fails to hold it. In this case, prices did break the resistance but since it has re-entered bears will be more dominant now.

In short, Nifty can move down lower till 10000 levels or even lower.

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