Index inverse H&S ??? NOT QUITE!!!

Many market players are taken by surprise by the current stock market rally the world over. But what seems to be more confusing the analysts is the 'price patterns' that the markets are making!!

Many known technical analysts are indicating that the Nifty / Sensex has an 'inverse head and shoulder' price pattern. In fact they have even computed targets for the indices based on this pattern.

I, for one, tend to humbly defer.

The price pattern in the Nifty / Sensex is NOT an inverse H&S, even though it looks like one. Just because a pattern looks like an inverse H&S does not make it one.

Think about this : What is an inverse H&S and what are its characteristics ??

It is a 'REVERSAL' pattern and it reverses a down trend. If that is the case the first thing to look for is the basic trend.



Check the chart above .. Do you see a down trend ??? My question to the learned analysts is "If there is no down trend then, what will the pattern reverse??"

I have always emphasised in my practical workshops about the placement of a pattern and this is one example of the objectiveness to be used in applying technical analysis.

Happy trading!

CA Rajiv D Khatlawala