Failed Breakout N More

In my last post on the subject of Breakouts posted on the 2th Of November with the Nifty around 6150 levels, I had painted a picture of a break-out in this post here with the Nifty then around 6150 levels.

Well Truth be told, we made it to 200 points above that level to reach 6350, but are currently at 6084 levels.

So what happened? This chart will tell.



The chart above is a point n figure chart which I use to study initiative and responsive activity to establish control.

Generally when you have a break-out ( blue dotted line is the level of break-out), it should be followed by a high volume activity in the direction of a break-out.Which means the longer time frame people should step in and take the market higher on volumes. That is the text-book definition of a break-out.

But earlier this week, especially on Monday and Wednesday, we had noted poor trade facilitation in our trading room with Wednesday finishing off as a neutral day suggesting equal strength between buyers and sellers.The same was suggested in this post here.

The higher red volumes bars( stars on charts ) on Monday and tuesday were an early indication, but till the market stayed above the blue dotted line, one could not term it as a break-down.What followed was a high volume breakdown below all the reference lines marked on the charts.

6249, 6178, 6098, and 5992 are each marked in the charts as places of initiative activity.6098 tried to hold the market yesterday by rallying about 38 points to 6135, but was taken out at the close on higher volumes.

There is a minor support at 6054 levels and 5992 will be the lower end of the bracket.

For next week, all the levels marked have their own importance with one level likely to take you to the other.This market will get sold into till 6178 and 6249 are not overcome on volumes.