Market Next week

Shocking revelations 

I have been telling about the highly bearish Head and Shoulders Pattern (H&S) from some time. This week, it broke down and closed convincingly. Now it is time to assess the full target it can achieve. The full target it "can achieve" is, believe it or not, 2150. Of course, there will be swings between the supports marked on the chart. I had mentioned last week that it can touch and take support at around 3950. On 10 Jul, it achieved a low of 3977, very close to the forecasted target. The way markets closed today, indicates that it is most likely bypass this level next week.

On the weekly scale, 3800, is a major support as that was the low achieved on 14 Jul 2008 and 15 Sep 2009. Notice that exactly one year back it hit a low of 3800. This most likely will happen here too. I have mentioned on the chart, the nearest support at 3720. Since, 3800, falls close by and a major support on the weekly scale, it must me considered as more relevant than 3720.

 

A breakdown, below 3800 convincingly will take NIFTY to 2700 easily to a minimum. Definitely, it is not easy to break it down; but not impossible. So, for next week, let us be conservative and take 3800 as the low. The rest of the game will follow, slowly.

 

Now, there is an amazing symmetry is you look at what happened a year back. As I said earlier, on 14 Jul 08, NIFTY took support at 3800, pulled up to 4265 and dropped again. But this happened prior to the H&S of 2008. This time, it is likely to happen after the H&S of 2009.  It took 29 trading days from the H&S breakdown of 2008 to take to the low of 2252. If the symmetry is to be maintained, it will take another 26 trading days to touch the lowest low in 2009. Making technical measurements, it is found that, 2550 was the 2008, breakdown full target. Definitely it extended a bit further, but stabilized around 2550. If you take symmetrical measurements, on the H&S of 2009, it points to 2150 as the final technical target. I am not saying that it will definitely achieve. But it cannot be ruled out. We will definitely know it in 25-30 trading days. Is it not shocking?