Trading Range, Again.

The Nifty responded well to the large declines in the US markets, closing Tuesday with only minor losses.

The Index has two technical patterns currently under development:

First, a rising wedge / rising flag pattern whicch was broken on the downside yesterday. This is a bearish pattern, giving a target of approximately 2100. Now, the pattern probabilities are (a) It may be a failure with the Nifty rallying up, (b) it may not reach its target, (c) It may be a successful pattern.

I assume the pattern is valid unless proved otherwise. A close above 2900 will cancel the flag.

Second, the Index is also in a trading range, between 2555 and 2755. A move out of the range should give a 200 point trend. If the Nifty closes above 2755, then the target is 2955 which will also cancel the flag (see above). Then, a close above 2755 is an early warning sign of a bullish reversal.

Traders always decide upon a systematic course of action. Apply money management rules and then let the market decide if it wants to reward us. Markets can do anything, so have an open mind.