Dated :- 17. 08. 2014                                 NIFTY SPOT : 7791.7

Hi,

Readers,

Nifty did exactly the same as was mentioned in my previous blog. Wherein it was mentioned that if follow through does not come Nifty will rebound. And the same has happened.

Overall picture of Nifty structure and what should be expected :-

Nifty is making 2^nd  broadening pattern on daily charts.

Nifty had already given breakout of broadening pattern on its way up at 6700 around levels. Back to back consecutive breakouts of these broadening patterns normally do not come. Thus one should be cautious as this broadening pattern and many other indicators are saying that Nifty may not have too much of upside on immediate basis.

Slope of ADX on weekly charts has also turned, showing pause in upward momentum.

Hence, Nifty will either be stuck in a range (as it is doing so far) for some more time or can correct (i.e. may come down).

Ideally the logical targets of this up move of Nifty are 7880 to 7910 and after that good correction can be expected. But these targets may or may not be achieved.

I am of the view that there is no harm in leaving the probable last 100-200 points. As there are some indications that Nifty may start correction any time. Thus, personally I advise to leave this bullish inverted head & shoulder breakout above 7756 on smaller time frame charts and wait for correction to start. Till then stay out and be cautious.

Readers should also remember that I had predicted on July 05, 2014 that Nifty is expected to make intermediate top in between 7750 to 8148. Since then Nifty is in a process of making intermediate top formation. These present moves are part of that.

Only for traders who want to play breakout of bullish H&S pattern :-

Nifty has given highest ever weekly closing. And new highs should be respected. Nifty on smaller time frame charts has also given bullish breakout of inverted Head & Shoulder (H&S Pattern) above 7756. With the targets of 7950. This virtually coincides with the logical targets mentioned above.

For them the trailing stop loss is 7700 and one can even have the smaller stop loss of 7730.

Trade accordingly and be cautious.