Said, The Nifty could retest 3,900-4,000 and added that the charts indicate caution. On Reliance Industries, Guppy said that the stock had good support at around Rs 1900.

The charts are telling us to take a great deal of care and caution because there has been a sharp rise earlier in April-May, then a retreat then a rise through to 4,700 and now the current retreat. The danger is that this has potential to create a head and shoulders pattern which gives us a short-term reversal and a retest of support at around 3,800.

In a six months trajectory, we have a continuation for the uptrend that is in place but not at the same speed and velocity. We can see a significant pullback towards 3,900-mark and then a gentler trend. The momentum trend that’s been in place over the last couple of months is unsustainable.

I am looking at the daily chart which is giving me both the left hand shoulder and the head. So what we are looking for is the potential for a right hand shoulders to develop and that could be a rally upto 4,400-4,500 followed by a retreat and a fall below 4,200 confirms that head and shoulder pattern development.

source: CNBCTV18