Avoid aggressive positions on either side
The NSE Nifty is moving two weeks of decline and two weeks of rising pattern in the previous eight weeks. In any case, a close below 17544 means there is a probability of another week of decline
image for illustrative purpose
The benchmark indices closed with small gains. With the help of global markets and the IT sector rally, the frontline index was able to close with 27 points or 0.16 per cent gain and settled at 17248.40. The Nifty IT index up by 1.18 per cent, and the Infra index is up by 0.11 per cent. The Media index is the top loser with 1.77 per cent. The other indices were ended with a less than one per cent loss. The negative market breadth is a major concern for now. On a positive day, there are 1244 declines and 758 advances. About 106 stocks hit a new 52-week high, and 161 stocks traded in the upper circuit.
The benchmark index snapped four consecutive days of decline with a small gain. After forming a Dragonfly Doji on the last weekly expiry, and got the bearish confirmations. Three consecutive bearish candles at the swing have given the weaker signals for the market. Every effort to rise has been utilised for the selling opportunity. The Nifty declined below 20 weeks, moving average decisively and formed a dark cloud cover as on date. A close below 175114 will be become a bearish engulfing. During the week, Nifty has declined 268.45 points or 1.53 per cent. This is an indication of a weaker market condition. For the past four sessions, it sustained below the 20DMA and the 50DMA is in a downtrend. Today's gap up opening has not sustained even for an hour and declined sharply.
Currently, it holds two distribution days. In the 17184-225 zone, the Nifty has made three lows, and it will act as a support for now. Closing below this zone means a bearish engulfing on the weekly chart. The Nifty is moving two weeks of decline and two weeks of rising pattern in the previous eight weeks. In any case, a close below 17,544 means there is a probability of another week of decline. On a 75 minutes chart, the histogram shows a decline in bearish momentum, as the last three days of price action is limited to the 17376-17184 zone. A move out of this zone will lead to an impulsive move. The overall trend is negative as the Nifty is moving in a downward channel. Better avoid aggressive positions on either side, as the market is undergoing a complex correction.
(The author is financial journalist, technical analyst, family fund manager)
