Nifty has decisively broken below an important support at 23900 last Tuesday, 12th November, 2024, after a 3 week consolidation. This breakdown also coincides with breakdown from a larger distribution pattern that resembles a massive Head & Shoulders pattern.
If the breakdown does not prove to be false in the next few days, it could mean a target of ~21500, close to the low of the June 4 election results day candle, a downward journey of another 2000 points from the last close ~23500. Daily chart given below.
Fig 1 - Daily Chart of Nifty showing a breakdown from a smaller consolidation and a larger H&S pattern
Banknifty has also broken down below the lower boundary ~50400 of a much larger consolidation pattern, that formed over 6 weeks, last Wednesday, 13th November. It is just above a minor support level ~49700. A breach below would open the floodgates to a much lower level ~46100, a distance close to 4000 points from the last close. Daily chart below.
Fig 2 - Daily Chart of BankNifty showing a breakdown from a 6 week consolidation
Meanwhile the US indices have retreated in the last week as the euphoria over Trump's electoral win settles and the markets come back to reality. All the 3 major indices, DJIA, Nasdaq and S&P are at previous support levels and it would be difficult to say at this point whether the spectacular year long rally has come to an end or there is room for more.
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