Nifty forming Descnding triangle?

Hi,
here is the weekly chart of nifty that clearly shows Descending Triangle pattern.






I am trying to discuss following points. Seniors please comment.

1)"Trend: In order to qualify as a continuation pattern, an established trend should exist. However, because the descending triangle is definitely a bearish pattern, the length and duration of the current trend is not as important. The robustness of the formation is paramount."


There is an uptrend on weekly that started since march - april 2009.

2)"Lower Horizontal Line: At least 2 reaction lows are required to form the lower horizontal line. "

This condition is also fullfilled.

3) "Upper Descending Trend Line: At least two reaction highs are required to form the upper descending trend line. These reaction highs should be successively lower and there should be some distance between the highs "

Yes.

4)"Volume: As the pattern develops, volume usually contracts. W "

Volume is contracting, but only seems so from middle of the descending triangle.

5) "Target: Once the breakout has occurred, the price projection is found by measuring the widest distance of the pattern and subtracting it from the resistance breakout. "

Roughly, the widest distance of pattern is a 1000 points.
That comes to about 4100-4200 as target.

Please waiting for seniors comments.

If you see the bottom left of the chart i.e. Oct 08-Feb09 then Nifty would have formed a Descending triangle there too imo .. (just visually from chart above). Failed.

So let the breakdown come i.e. cmp below 5170 spot THEN we review the descending triangle

Thank you!!!
As a newbie, i think this is the first lesson I ve learnt in chart reading.

hi Krist
i am not experienced and senior in this regard but as i do have a decent knowledge about these chart patterns as they are one of the things we learn during technical analysis...
the problem with these chart patterns are that not every chart pattern may be assumed to be hitting the targets as explained in the textbooks...
Because these chart patterns only work when u know where it is formed..that is LOCATION...
if it as some critical support and resistance levelsthen the importance of that pattern becomes manifold...otherwise..these may work as trend- continuation rather than being trend-reversals..as shown in textbooks..
Well in this case i don't know if its a trend- continuation or trend- reversal...
Still in this case it has been forming at major resistance levels ..so we can assume the reversal part but one has to see that the breakout happens with high volumes...otheres this pattern may not hit the target....
Anyways check out the post here...I have predicted this one month before...still it has not changed its structure
http://www.traderji.com/technical-analysis/51605-starving-trader-11.html#post551873
Good luck in trading ahead...

A descending triangle is what I had pointed out elsewhere. I was looking at the daily charts.

The chart of Oct 08 - Feb 09.. weekly and daily.. doesn't seem like a triangle forming..does it?

WEEKLY



DAILY

Would the way I have marked qualify as a DT?

krist, you have nicely filled the checklist of DT pattern and identified the reasons for it.
To me also, it looks like a valid descending triangle. But rather than looking at the name of pattern etc, I prefer to look at market psychology behind it and trade it.
An analyst will get additional bonus for identifying perfect DT, but for a trader, it is more important that how he trades it.

To me, lower highs are indicating that bulls are loosing the power. They are not able to push the prices up whereas bear are able to extend their zone by making new lower highs on every bounce. Market Structure wise, we are sitting on top, after nice upmove of 2 years. Correction has been only of 1000 points whereas the bull move was of 4000 points. Will smart bull buy at the top? I don't think so.

As pointed by SM the picture of 2009 low. I think, that was also a nice DT, but will smart bears sell after huge selloff ?

These 2 questions give me idea about the possible breakout direction and based on that, I take the trade. My entries are near low risk points.
Lets say, even if this DT is valid, will u trade like all others at the break of support line at 5200 level. or will you take position at descending line as per your system and pocket additional 400 points of profit.

Support level has been tested 2 times. Any price level gets weaker with every touch, so probability is high that it will break. But that is upto market to tell us. As a trader, we make our opinion based on what we see, we trade our view and we manage the risk.

hope this helps.
Happy Trading

Krist, I am very much a newbie myself and not much of a chartist, but it seems to me that while the price action in the said period forms a sort of DT, the volumes aren't in much of a downslope.

Drawing geometrical lines or tangents is not going to help. However as a newbie, this is where everyone begins. It gives you food for thought.

Target is spot on. It will bottom around 4000 before fresh bull run begins in 2012.There is nothing new which ever happens in trading. Same old collective psychological patterns.