Head and shoulder pattern is also a popular trend reversal pattern formed on charts, once this pattern is formed there is high probability that initial trend will reverse soon. This type of pattern gets formed on a bullish market i.e. when nifty future is in uptrend, first a top gets formed known as shoulder then a higher top forms called head, on formation of head second shoulder gets formed. This is reversal pattern and we will defiantly see some selling coming in nifty future, lets see if nifty future breaks below the neckline.
Trend reversal can be identified by looking at important levels such as support or resistance. Reversals are not only dependent on technical analysis but they have much to do with fundamentals also like interest rates, employment data, industrial data, GDP data and inflation.
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