Market reversal in the wake of GST 2.0 - Will Nifty break out again ?

It has been an eventful last week in the Indian markets. Look at the Nifty 2H chart below

Daily chart of Nifty illustrating a breakout followed by a reversal

Nifty had formed a bullish double bottom on Friday, the 29th of August. The subsequent price action formed what looked like a 1-2-3 bottom pattern on 3rd of Sep where the low of the pattern coincided with the double bottom.

The breakout from the pattern came right on schedule the next day with the overnight announcement of GST 2.0, a massive reform that would boost consumption and support the GDP. As expected, the price opened with a huge gap up the next morning, in what was a clear breakout from the pattern as well as a horizontal range.

However, the breakout move hit a roadblock in the resistance zone created by a huge overnight gap down on 26th of August, could not sustain and dropped sharply over the next 2 days back into the range, only to recover partly in the afternoon session of the second day, which was last Friday.

As it stands now, Nifty is interestingly poised just below the upper boundary of the range, all set for a second breakout. Whether the second breakout happens or Nifty drops further towards the bottom of the range, only time can tell. But the technical picture looks in the favor of the former.

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