Nifty Monthly Chart
Price channels are continuation patterns that slope up or down and is bound by an upper and lower trend line. The upper trend line determines resistance and the lower trend line determines support.
Many a time prices move systematically within a channel making it easy to draw the channel.When this does not happen we first determine the existing trend.In case of Nifty the trend is up.Therefore the main trendline will be the one determining supports and sloping up as is depicted in the monthly chart. Drawing a line parallel to the Main Trendline passing through a minimum of two price points gives us our Resistance line and the channel is complete.
Till prices move within the channel, the trend is bullish. Failure to test the Resistance line and a subsequent reaction is the first warning of a possible trend change. Continued fall with a break below the main trend line support would be confirmation of the trend change. A break above resistance line though would be bullish and indicate accelerated upward momentum.
Nifty is close to doing one of the two - Set in a reaction OR accelerate upwards ??
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