FinNifty and Head and Shoulder Pattern

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 Fin Nifty daily chart


Fin Nifty 2 hour chart


Fin Nifty Option chain analysis as on 23rd May 2023



Analysis

From the above daily chart, prices are facing the resistance at 19,600 levels where the red upper horizontal line is placed. There was an attempt to break this line but due to overhead supply it re-entered the horizontal line. As of now prices are above both the moving averages but not for long as this week there are high chances that prices will move below the averages.

As seen in the above 2 hour chart, the index has formed a bearish head and shoulder pattern, the target of the pattern comes to 18800 levels. Also in both the above time frame, RSI is exhibiting negative divergence which is sign of caution.

An option chain analysis is done For Fin Nifty as on 23rd May expiry, which is suggesting as there is CE sellers which are very much active at 19,500-19,600 levels and on the lower side there are PE sellers at 19,300-19,200 levels. This suggests that expiry will be within this range. There is a high possibility for the index to break the support of 19,200 levels on the downside which can drag the index lower towards 18,800 levels.

Wave theory suggests, prices have completed wave v in an ending diagonal at higher side and following that it completed wave i at 19,207 levels and currently it is moving higher in the form of wave ii where wave c is ongoing which can terminate in the range of 19,480,19520 levels and then it will unfold wave iii on the lower side which can go till 18,800 levels (minimum).

The summation is Fin Nifty is negatively poised as there can be a minor attempt towards 19,480-19,520 levels where one can go short for the level of 18,800 on the downside over short to medium term.

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