Nifty, having closed above 50 dsma, broke out of a consolidating channel with a midway reversal of a broadening top..

Nifty's bull-bear tussle just got sharper, within the trading range for a decisive phase ahead...

Nifty Pre-Market View.

FII's have started to sell for the last 2 days, after 9 days of buying- a resumption of consolidation within the major uptrend. 

Prices, in the short term, have closed below the two key ST averages. (As long as prices close below these, technicals remain weak; only a close/sustaining above it would reverse the ST trend) 

The ST direction is "biased DOWN", as long as prices stay below 7768 & close below these two key averages (21 or 34 hr smas). 

The strategy that has worked consistently well with low risk-high reward ratio is "Initiating a trade at 50%-61.8% retrace with 80% as SL". Adapt to it. 

Aggressively Holding below 7755(DEma), Conservatively Holding below 7768(Wk.Pivot), downtrend continues....

Aggressively Holding above 7641-61, mild strength possible....

"Broadening top"/ expanding triangle's last big downmove is unfolding...confirmed with a break of 7760.

Nifty's broadening top or a running correction..?

Bullish: If the correction was a running kind, a big upmove is possible. TT favours it except for the weak ema/sma combination. So a follow up move is required.

Bearish: A broadening top may be forming. Details listed below.

BROADENING  TOP:

• Broadening Top is a pattern identified by finding diverging trendlines that connect a series of widening peaks and troughs. The most common type of broadening formation is found at the end of a prolonged uptrend and is used to predict a move lower.
• As the two trendlines diverge from the apex, the pattern resembles a reversed version of a symmetrical triangle.The signal it generates is deemed to be very reliable. 
• Broadening Top is a rally to a new high, weakness to an intermediate support level, a second rally to a higher high on increased volume and decline through the intermediate support level, a third rally to a higher high on strong volume followed by a eventual collapse.
• Because Broadening Tops are very large reversal patterns, the technical implications are usually extreme. 
• The target is derived by subtracting the height of the pattern from the eventual break down level.
• Unlike most consolidation patterns, broadening tops feature increasing wide ranges and greater volatility as time passes. 
• Broadening formations are only found in topping formations because they are the product of unrealistic expectations on the part of bullish investors. 
• Downside breakouts often lead to small 2-3% declines followed by an immediate test of the breakout level.
• If the stock closes above this level (now resistance) for any reason the pattern becomes invalid. 
• When one looks at the pattern the resemblance to a megaphone is striking.

At such a diverse juncture, stay with the prices as reflected in the TT and take some aggressive positions closer to the "inflection point" (Which rises by the day).

Broadening top explained

WHEN YOU SEE A BROADENING TOP,
THE MARKET WILL EVENTUALLY DROP

Major reversals in trend--those that mark the turn from a bull to a bear market--can take the shape of many price patterns. Stocks or markets can top by creating, for example, head and shoulders or descending triangles. One of the most difficult patterns to predict, however, is the broadening top.

A broadening top is hard for the swing trader to spot because it is seen far less frequently than other important price patterns. It can be visualized, however, as opposite to a symmetrical triangle. Whereas the symmetrical triangle consists of two lines that converge, the trendlines of the broadening top instead diverge. The shape that best captures this pattern is that of a megaphone.

The classic technical analysis text by Edwards and Magee characterizes a broadening top as a market that lacks intelligent sponsorship. It is one in which the public is being whipped around and driven this way and that by rumors. As such, volume during the broadening top pattern tends to be irregular. During some rallies volume may expand, but during others it tends to be tepid. The same pattern applies on pullbacks. Because it is so unpredictable, the broadening top pattern is extremely difficult to trade. There is no clear breakout to either the upside or downside edge of the pattern.

Below you will find a chart of the S&P 500. I have included the 150-day moving average to show that prices have gone below this key measure but have now popped back above it. Within the context of a broadening top, the S&P could reach a marginal new high of say 1170 without changing this pattern's interpretation.

What would cause me to reject the broadening top interpretation? First, the S&P would have to break out above 1163. Second, it would have to hold the breakout level on a pullback. And third, it would need to reestablish an uptrend by making a series of highs lows and higher highs.

Such behavior would keep the index above a rising 150-day moving average and would turn the March-May pattern of lower lows into an aberration. Time will tell if the buying power remains to re-ignite this kind of bull market. Until proven otherwise, however, the broadening top explains the market's current choppy action.

Source

Nifty's tops flooded with "Broadening tops"..!!

"Hour Low ema" provided the final support.Uptrend intact.Dip buying opportunity @ 5078. TSL may be 2-day low @ 5055