Market Next Week

Legend: NIFTY formed an Eve and Adam Double Top (EADT) during first week of Jun and fell very close to the maximum target of the above formation. It then formed an inverted Head and Shoulders (H&S) and broke out on 26 Jun making the intensions of a rally very clear. However, the price action before achieving the target, did a throwback to the neck line 'N" of the H&S and now rallying again.

 

What can we expect next week?: If there was no throwback, the maximum target would have been close to 4830. The theory says throwback affects the performance of any chart pattern. Hence we should consider the next lower target as the maximum which lies on 4550-70 (See line "R2").

Since NIFTY has currently paused near to the resistance "R1", with a much higher momentum, we should expect a strong breakout on when Market opens on Monday, which could take NIFTY straight to "R2". Technically this is an extremely strong resistance point and it is unlikely that NIFTY pierce this level easily.

 

What next?: If NIFTY stops its rally and R2 and turns back downwards, then….We should expect the real danger in the offing. I will go into that next week, as there is more than a week left (probably) for trend change confirmation