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Introduction:

There are different chart patterns to study for while trading in nifty.Different nifty live charts are helpful in studying the market movement of prices.There are hundreds of thousands of market participants buying and selling securities for a wide variety of reasons, in the hope of gain or fear of loss, While trying to figure out why participants are buying and selling can be a daunting process. Nifty live chart patterns put all buying and selling into perspective by consolidating the forces of supply and demand into a concise picture. As a complete pictorial record of all trading, chart patterns provide a framework to analyze the battle raging between bulls and bears in a specific time frame.More importantly, nifty live chart patterns and technical analysis of nifty live chart can help determine the best trading practice.

Here we are going to discuss various nifty live chart patterns that traders and investors observe to position themselves accordingly.

  • Head and Shoulders (Top):

    A head and shoulders pattern is also a trend reversal formation.The pattern contains three successive peaks.It is formed by a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder). A neckline is drawn by connecting the lowest points of the two troughs. The head is the second peak and is the highest point in the pattern. The two shoulders also form peaks but do not exceed the height of the head.When prices break through this neckline and keep on falling after forming the right shoulder, it is the ultimate confirmation of the completion of the Head and Shoulders Top formation.

Below is a pictorial representation of head and shoulders(top):

head and shoulder top

  • Head and Shoulders (bottom):A valley is formed (shoulder), followed by an even lower valley (head), and then another higher valley (shoulder). These formations occur after extended downward movements.This often indicates a change in the trend and the sentiment.Prices move up from first low with increase volume up to a level to complete the left shoulder formation and then falls down to a new low.

The target is calculated by measuring the distance between the head and the neckline, and that is approximately the distance that the price will move after it breaks the neckline.

A major difference between the Head and Shoulders Top and Bottom is that the Top Formations are completed in a few weeks, whereas a Major Bottom (Left, right shoulder or the head) usually takes a longer time from a few several months to sometimes more than a year.

Below is a pictorial representation of head and shoulders(inverted):

head and shoulders inverted

 

  • Double Top: A term used in technical analysis of nifty live chart to describe the rise of a stock, a drop, another rise to the same level as the original rise, and finally another drop.A double top is a reversal pattern that is formed after there is an extended move up. The "tops" are peaks which are formed when the price hits a certain level that can't be broken.It appears as 'M'.

With the double top, we would place our entry order below the neckline because we are anticipating a reversal of the uptrend.

Below is a pictorial representation of Double Top(reversal):

double top

  • Double Bottom: This is just the reverse of Double top, the lowest point or price reached by a stock in a given time period, which is followed by a steady increase.The double bottom is also a trend reversal formation, but this time we are looking to go long instead of short. These formations occur after extended downtrends when two valleys or "bottoms" have been formed.It appears as 'W'.

Below is a pictorial representation of Double Botttom (reversal):

double bottom

 

 

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