October 24, 2016

Neowave outlook of market

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After hitting higher high-low from Tuesday to Thursday, Index hit a lower high-low on Friday. On the Intra-day chart, the action at the top of the week was looking like a “possible” Head & Shoulders formation. Coming week could be all about success or failure of the H&S possibility.

The success of the H&S pattern would require high-volume break below its “Neckline”.

Friday’s action formed into a Bear candle with substantial lower shadow due to late recovery during the day. H&S possibility would succeed if Index retraces the late recovery in faster time, and breaks below Friday’s low.

Break below the Neckline would project height of the pattern, from Neckline to the Head, as a downside implication of the pattern. Such projection would calculate levels closer to Aug/Sep lows as a downside possibility.

However, protecting the “Neckline” and thereafter strength above its “Head”, i.e. last week’s high, would reject the H&S possibility and open +ve options. Such a move would also put the structure shown with Orange in jeopardy.
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