Confirmation still due for Shooting Star

NSE Nifty closed flat after a range-bound trade expiry day. The Nifty fell by just 9.85 points and closed at 19,802 points. The Nifty Pharma and IT index were the losers with 1.56 per cent and 0.59 per cent, respectively. The PSU bank and CPSE indices also closed marginally lower. The Nifty Realty index is the top gainer with 1.03 per cent. All other sectoral indices gained less than half a per cent. The India VIX is down by 4.64 per cent to 11.31. The market breadth is positive as 1,350 advances and 1,096 declines. About 129 stocks hit a new 52-week high, and 107 stocks traded in the upper circuit. CG Power, Reliance, HDFC Bank and TCS were the top trading counters in terms of value.

The Nifty has reacted exactly from the last Thursday’s high. Thought it close flat, formed a Shooting Star candle. The 19,627-875 range has not broken for the last five days. As the index formed a bearish candle at the swing high, it is better to stay cautious. At the same time, the Nifty has not given any bearish signals. The Shooting Star required a confirmation for its bearish implications by closing negative on Friday.

The Nifty closed near the day’s low. The index is unsuccessful in crossing the previous swing high. It has been trading above the 50DMA for the last seven days, but this moving average has yet to enter into the uptrend. Currently, the Nifty is 1.15 per cent above the 50DMA and 1.89 per cent above the 20DMA.

The MACD histogram shows a declining momentum. The RSI is flat and around 60. On an hourly chart, the negative divergences still exist. The Stochastic RSI is in the extreme zone. As long as the index trades in the 19,637-875 zone, it is better to apply neutral strategies. The outperformance continues in the broader market indices. The Nifty Mid-cap index is at another new lifetime high. The pattern looks like a bullish flag breakout. The much broader index, Nifty-500, is near a new lifetime high. The Nifty is also in the leading quadrant. If the momentum improves further, we may see a close above the prior swing high. A close below the prior day’s low is important for a reversal on the downside. Otherwise, there is no signal available for a bearish view. Stay neutral to positive bias.