Nifty registered an new life time high last week. The weekly chart above indicates a probable cup & handle formation target set at 12300. The weekly RSI is strong and is well above the bullish zone. A divergence is noticed in the “BXTRENDER” indicator, this divergence displays the scarcity of breadth on Nifty.
While on the daily chart (below) we noticed Nifty gaped up and maintained its run on Friday.
We need to ascertain whether this a is break away gap or a exhaustion gap? Watch this gap analysis video here. The range of the candle formed on 26th July should be added to the high of 27th July’s candle. If Nifty is able to sustain above the range i.e., 11370 levels, then we can consider this gap as a break away gap and expect Nifty to continue up in bullish mode, and the weekly cup & handle target of 12300 may not be far from reality, but if it fails to sustain Nifty may falter of time being. 11120 is a very strong support zone.
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