The NIFTY opened on a positive note and registered an intraday high of 5030 levels. The Index
witnessed selling pressure from the higher level which led it to decline to an intraday low of
4911. The Nifty finally closed at 4940 with a marginal loss of 5 points.
The most important observation is that the nifty appears to be forming a Head & Shoulder
pattern (as marked in the intraday chart above).
A Head & Shoulder is a bearish pattern as it is associated with sharp price decline once the Nifty records a breakdown from its neckline support level of 4910.
The measuring implications of the pattern suggest that following a breakdown the index could head towards the following price levels: 4860-4840 /4800 / 4750 levels.
On the upside the index has multiple resistances at the levels of 4980 / 5020 /5050. The head
shoulder pattern would be negated once the nifty closes above the 5050 level.
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