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CNX IT: The Start Of A Tradable Uptrend

It is observed that a H&S pattern that does not have a sharp right shoulder is likely to be unreliable. In other words, it is unsafe to short a H&S without an acute last bounce.

The CNX IT is a recent example. What was more striking, was that volumes seemed to contract with falling index values, and expand whenever the index rose. The message was to avoid shorting.

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The pattern that seems to have formed is some sort of downward-sloping wedge. That is usually a bullish sign. In this case, the target is about 7400.

(click to enlarge)Click to enlarge

The April future shows a downward sloping channel. Two hammers are seen. That is a sign of trend change. Its possible that we have a buy signal by the end of the next trading day.

More at my trading blog