Nifty forms lower high, lower low candle

The equities were subdued as the long weekend was in place. NSE Nifty declined by just 7.30 points and closed at 19,794.70 points. All the sector and thematic indices moved in the range and closed with less than a percentage point gain or loss. The Nifty IT is the top loser with 0.97 per cent, FMCG down by 0.47 per cent. The Nifty Pharma is the top gainer with 0.87, followed by the Metal index with 0.87 per cent. The market breadth is negative as 1,286 declines and 1,158 advances. About 132 stocks hit a new 52-week high, and 103 stocks traded in the upper circuit. PayTM, BHEL, and LIC were the top trading counters today in terms of value.

The benchmark index is nervous about moving directionally. For the last six days, the range was not broken. The volume declined significantly. The volatility is also at the lowest level. This scenario may not continue for many days. Expect some sharp moves on either side next week if the index breaks out of the range. The Nifty has formed a lower high and lower low candle. Even on the hourly candle, the index failed to form swing highs. On a weekly chart, it has formed an inside bar. The Index must come from the 19,627-19,875 range for directional trade.

The 8EMA support is at 19,725points, which may act as an immediate support. The index must close below this for a reversal signal.

There are no bearish signals available now, and there are no divergences on daily and weekly charts. On an hourly chart, the negative divergences are intact, but unsuccessful in getting confirmation for bearish implications. For bullish bias, a move above 19,875 level is required with volume support. For the last five days, the volumes were much lower than the average. As the long weekend, the traders were not interested in taking positions. Stay neutral within the range, and get ready for an impulsive move on either side.

(Chief Mentor, Indus School of Technical Analysis Financial Journalist, Technical Analyst, Trainer, Family Fund Manager)