Wednesday, September 12, 2012

L&T: A classic topping pattern – Head & Shoulders

L&T: A classic topping pattern: For Larsen and Toubro we are showing a bigger term outlook which does not look good. Prices have formed a very big distribution pattern as shown on the first daily chart. Since June 2010 onwards prices have been forming a Head and Shoulder topping pattern the neckline of which was finally broken in September 2011 near 1500. 
There was a very big fall in this stock after that towards 1000 levels which achieved the conservative shoulder target.
Larsen and Toubro Daily chart:

Waves Analysis:
Currently prices moved up from 1000 and retested this neckline twice, first in February 2012 and then in August 2012. We do not think prices will be able to break above this neckline.
Also as seen prices are forming a smaller Head & Shoulder pattern since July 2012 onwards just below the neckline of the bigger pattern. This sends across strong bearish signs from medium term perspective. A break below 1300 will confirm this small distribution pattern with a target of 1100 on downside.
The next chart of L&T shows wave counts ………….(omitted purposely, wave counts meant only for paid users)….. The ultimate target for the bigger H&S pattern is 750 and the wave counts, momentum and resistance levels are all in sync with this outlook.
In short, expect short term pull back towards ……………..before next big leg down that will take prices to….as per wave analysis…..
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