Avoid long positions for now

With the all-around selling pressure, the benchmark indices sharply declined. NSE Nifty was down by 99.60 points or 0.56 per cent and closed at 17884.60. Only Nifty IT and Auto indices are up by 0.54 per cent and 0.28 per cent. Bank Nifty led the fall, with a 1.05 per cent decline. The FinNifty also declined by 0.98 per cent. All other sectoral indices declined by 0.2 per cent to 0.98 per cent. The volatility index, India VIX, is up by 2.27 per cent to 13.38. Broader market breadth is negative as 1277 declines and 668 advances. About 133 stocks hit a new 52-week low, and 76 stocks traded in the lower circuit. Adani Enterprises, Reliance, and ICICI Bank were the top trading counters in terms of value.

Nifty is holding on to the 20DMA support after a sharp decline. It closed below the previous day's low. It is also holding a 38.2 per cent retracement level of the prior up move. With today's move, the RSI once again declined below the 50 zone. The momentum is clearly on the downside. On an hourly chart, The Nifty failed to move above the prior bar high and declined below the moving average ribbon. The hourly MACD line is also below the zero line. As the moving average ribbon is also in the downtrend, the Nifty is technically weakened. It is 0.98 per cent below the 50DMA. Importantly, the 50DMA is in a downtrend. The Elder impulse system has formed a strong bearish bar. The Jdk-RS-Momentum declined below 100, showing that the momentum is completely on the downside. Now the 200DMA is just 2.93 per cent away. Two consecutives bearish HeikenAshi candles also indicate the index is in the bear's grip. A move below 17836, the next support is at 17744. If Nifty fails to close above 17950, there is the highest probability of testing 17520. For now, it is better to avoid long positions.

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