Charts indicate exhaustion of trend

The positive bias continued for the fourth successive day. The NSE Nifty closed at 17512.25 with a 25.30 points gain. Interestingly, not a single sector index gained or lost a percentage point. The Nifty IT is the top loser with 0.90 per cent, and the FMCG and Realty indices were the top gainers with 0.40 per cent. All the other sectoral indices are limited to less than 0.40 per cent either way. The market breadth is negative as 1046 declines and 845 gainers. About 55 stocks hit a new 52-week high, and 67 stocks traded in the upper circuit on Wednesday.

On 135 points volatility, Nifty closed just above the 50DMA. It opened with an 82 points gap up, but was not sustained for a long period. It formed a series of lower-high candles on the hourly chart and failed to close above the prior bar high. The index closed below the open and formed a bearish candle. As we suspected it on Tuesday, the exhaustion of a trend is clearly visible on Wednesday. The Nifty also faced resistance at the slopping trend line drawn from the October 2021 high. The 61.8 per cent retracement level 17581 also acted as resistance. A close above this level will be a game changer for the market. In any case, a weekly close above the 17581-660 zone will also be a big positive for the market.

The index is currently out of the 50 and 200DMA range and closed above 17429, which is a valley point of double bottom, for the second successive day. As the weekly expiry is on, it may trade between the 17421-17660 zone. This almost 250 range will be crucial for Nifty. A decline below the 50 DMA of 17495 will raise doubts about the positive bias. The RSI is on the 55 zone for the second day. The ADX needs to improve its strength for a stronger move. Currently, the Nifty is in a leading quadrant as the RS and Momentum are above the 100 zone. The KST has given a fresh buy signal.

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