Back in the Old Trading Channel, Now What ?
After the stupendous rally of last Friday, Nifty index and the futures contracts are already back in the old trading channel. Now, the important question is whether the present bounce is the start of new leg of medium term trend or not. Unfortunately, the answer to the million dollar question will remain unanswered until the market itself reveals it's hands. As the important question remains unanswered, let's examine the key takeaways from the recent market action. Firstly, the old trading channel was broken. Secondly, as the weekly close was inside the channel, let's give the benefit of doubt to the fact that the channel remains intact for the time being. Third, the 5175 - 5200 area has become more important support or reference area because of the double bottom pattern. Fourth, the falling trend line or supply area still remains above the market. Fifth, the horizontal support at 5175 - 5200 area and the falling trend line is showing a descending triangle pattern in the charts. Fifth, until the market closes above the medium term falling trend line and remains inside the channel, the chances of the market breaking the lower end of the channel remains. ( Please see the daily and weekly charts below. )
