15800-886 zone in sight
Nifty may retrace back and resume the up move; Back-to-back Doji candle's got the confirmation for a bullish reversal, but the last five minutes' selling volume is much, much higher indicating that the traders exited most of the positions by the end of the day
image for illustrative purpose
The stock market bounced sharply after two days of sideways action. With positive global cues, the Nifty bounced by 288.65 points or 1.88 per cent. The Nifty IT index outperformed by 3.13 per cent. The broader indices, Nifty Midcap-100 and Smallcap-100 indices, are also up by 3.56 per cent and 3.42 per cent, respectively.
The Media index is up by 5.49 per cent. The other sector indices advanced by 1-2.7 per cent. Market breadth improved and was positive as 1759 advances and 366 declines. On a big positive day, there are 118 stocks hit a new 52-week low. About 140 stocks traded in the upper circuit and 96 stocks in the lower circuit.
The Nifty has broken the 13-hour range with an impulsive move, as we expected. It retraced and closed above 23.6 per cent of the recent fall. It faced resistance at 8 EMA. It tested above 15700 level, and with an intraday profit booking, it closed at just below the 8 EMA.
The RSI was sharply up to the near 40 zone. If the global markets co-operate, the Nifty may continue to rally towards the 15800-886 zone. We can't expect more than this for now. Tuesday's rally has not attracted much Open Interest (OI).
On a 1.88 per cent rally, the Open Interest rose by 3.67 per cent. The volume was recorded above the average. With Tuesday's rally, the back-to-back Doji candle's got the confirmation for a bullish reversal.
But, the last five minutes' selling volume is much, much higher, indicating that the traders exited most of the positions by the end of the day. On the hourly chart, the Nifty has formed a Bearish Engulfing candle at day's high, and they got the confirmation for its implications.
The Nifty may retrace back with a small intraday decline and will resume the up move. For now, there are very little chances to go short in the market. Be positive as long as it protects Tuesday's low of 15419. Otherwise, be with the flow.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
