India’s benchmark index Nifty has produced a rising wedge pattern on the daily chart.
A rising wedge comprises trend lines connecting higher lows and higher highs. Trend lines, however, are converging – a sign of weakening of upward momentum.
Hence, a rising wedge breakdown is considered a sign of bearish reversal.
However, note that the rising wedge breakdown needs to be confirmed by a daily candle. Also, it should not be a sideways breakdown.
If we do get a convincing breakdown, the index will likely revisit the March 24 low of 7,511. I would initiate a bear put spread if the rising wedge breakdown is confirmed.
A rising wedge comprises trend lines connecting higher lows and higher highs. Trend lines, however, are converging – a sign of weakening of upward momentum.
Hence, a rising wedge breakdown is considered a sign of bearish reversal.
However, note that the rising wedge breakdown needs to be confirmed by a daily candle. Also, it should not be a sideways breakdown.
If we do get a convincing breakdown, the index will likely revisit the March 24 low of 7,511. I would initiate a bear put spread if the rising wedge breakdown is confirmed.