Can we expect Nifty target of 10,000+ by March 2018? What is the rationale for such a target?

Based on historical patterns and probability of repetition, we can expect a probable Nifty target of more than 10000+ by March 2018.

Let me break down and explain my observation in a simplified manner. 

Nifty Target

METHOD OF ANALYSIS:

Nifty Target

I have used these simple technical patterns to analyse the probable returns of Nifty over the next 1 year and explain my personal rationale for Nifty target of 10000+ by March 2018:

  1. Cup and handle formation to identify historical patterns.
  2. Moving Averages
  3. Simple mathematical calculations

ALSO READ : Nifty trend analysis for May 2017 -Simplified analysis for Traders

Analysis and Observations:

Nifty Target

From the Chart above, Nifty formed a large cup and handle pattern from Jan 2008 to Feb 2014.

The Cup and handle pattern in the said period took a total of 2247 days to complete(1036 days for Cup pattern and 1211 days for handle pattern).

A breakout occurred in March 2014. It took 364 days (1 Year) for Nifty to reach a high at 9119 which is an approximate return of 44% over a period of 1 year.

Nifty moving average was above 50 DMA and 200 DMA during the breakout.

The same similar setup of cup and handle is formed in Nifty on a smaller scale from March 2016 to February 2017.

The new Cup and handle pattern took a total of 742 days to complete (560 days for Cup pattern and 182 days for handle pattern).

It is observed that the breakout from this pattern started on 14 March 2017. Nifty moving average is also above 50MA and 200MA.

Interpretation:

Since the Cup and handle pattern is smaller in duration this time, let us calculate probable returns of Nifty over a 1 year period taking into account the last pattern duration.

The last pattern took a total of 2247 days to give a breakout and Nifty gave a return of 44% approx.

Since the current pattern is smaller and took only 742 days for a breakout, we can say that it is only 33% of the previous larger pattern duration.

(2247 Days divided by 742 Days x 100)

Calculation of Nifty approximate returns:

Assuming returns would also be correlated as per that percentage let us calculate the probable Nifty return over the next 1 year (365 days).

  • Breakout date – 14 March
  • Nifty Breakout price – 9119

Nifty current pattern duration compared to previous pattern (In percentage) = 33% (742 Days/2247 Days x 100)

Nifty previous cup and handle Pattern return after breakout = 43.00% approx ((9119 – 6361)/6361) x 100).

Probable Nifty returns = 14.00% approximately by March 2018 (43 x 33%).

Nifty target probability by mid March 2018 = 10395 approx (9119 +1276)


Analysis limitation:

This is purely based on historical patterns and technical analysis.

I have not taken into consideration any radical global uncertainties or Black swan events that may completely skew the market direction.

Lastly, please do not take any positions based on this personal analysis. Do your due diligence before investing.

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What is your view on this observation and analysis? Please share your Nifty target in the comments section below!

(The idea of this analysis was contributed by Mr Ashish Chauhan. Learn more at www.tradingview.com)

M KithanFEATUREDNIFTY TRENDCan we expect Nifty target of 10,000+ by March 2018? What is the rationale for such a target? Based on historical patterns and probability of repetition, we can expect a probable Nifty target of more than 10000+ by March 2018. Let me break down and explain my observation in a simplified manner. METHOD...Simplifying Trading