Cup and Handle in Nifty examined again.

Wildeazoscar said:

“the bottom of the cup is never found at the left but at the center of the cup(here the 2250 low of nifty)….rather it was a Adam and Steve reversal, followed by liquidity madness, and once over, the market is likely for an unprecedented low followed by at least two more years of bear cold”

I have given below the weekly chart of the Nifty which has the possibility of a cup and handle pattern marked on it. Two problems that arise in the pattern are:

1. It is not exactly a rounding bottom.
2. Volume did not increase during the base formation.

Wildeazoscar mentions another issue – which the final lows were made at the start of the base, rather than at the center.

Fair enough. This may be an imperfect pattern. If the Nifty were to correct and make some kind of handle, then cross 4650 on at least 50% higher volume than average, what should we do?

A breakout above 4650 after (a) a correction, and, (b) on above average volume will qualify as a buying opportunity. The pattern can be called cup and handle, or head and shoulder (inverted) but the message is the same – it should be going up. Now, this breakout may never come about, that is always possible.

Wildeazoscar describes the lows made in 2008-09 as an Adam and Steve’s reversal. I think he is referring to an Adams and Eve reversal. The Adams low is sharp narrow and deep (Oct low), while the Eve bottom has a more gentle rounded appearance (March). This is a good description, although the lows in a cup and handle base can be made of an Adam and Eve combination.