A breakout and a Pause.

On Tuesday, April 17, the Nifty closed at 5300 approx, which was the top of the range between 5200 – 5300. The day saw a sharp rally from 5220 lows, suggesting that a breakout above 5300 was likely.
Today, the Nifty opened with a big 40 point gap, remained above 5330 and finally gave up the gains to close almost at 5300.
So, what happened?

Well, a breakout is a breakout. The Nifty has broken above 5300 today. Often, a pullback comes in after such breakouts. Today’s afternoon decline may be such a pullback.
When do we know that the breakout is failing? If the Nifty were to go below 5250, intraday, that will be a sure sign of a failure.
This is a trading range. I have written earlier that ranges are the most difficult pattern to trade. The best trades often are the ones that were not taken.