Mr. Double Top is that you?Following a contracting triangle breakout today, NIFTY zoomed up with a fair amount of pull backs which denote more than just a regular retracement. Over a larger time frame, one can observe NIFTY ultimately forming lower highs since it made the last all time high. Today, near the closing bell NIFTY made a double top and slipped down from what one would consider a healthy retracement. These sharp pull backs show the power of bears to cause a dip and trap for buyers hoping a fresh bull run.
However, patterns can break so keeping in mind the risks you should not stick to any particular pattern assuming the holy grail to market formations. On the right axis is Fibonacci retracements we can observe if a sharp fall occurs if the double top pattern holds true.
