Daily MACD indicating a fresh sell signal

The selling pressure continued for the secondary. The NSE Nifty closed below the previous day's low and showed weakness. As suspected about the limited upside, it has given clear weakness signs. The Nifty declined by 76.15 points and closed at 15691.40. Only Nifty IT and FMCG indices closed in positive territory by 0.57 per cent and 0.14 per cent, respectively. The Metal index fell most by 2.32 per cent. The Bank Nifty, FinNifty, Auto, Energy, Realty, and Pharma indices down by over one per cent. The India VIX is up by 2.84 per cent. The overall market breadth is negative as 1,274 declines and 675 advances. Today, 194 stocks hit a new 52 week high, and 143 stocks traded in the upper circuit.

The Nifty finally showing the reversal signs. Three consecutive doji candles, initially indicated exhaustion in the trend. The last two days of decline, and closing at the week's lowest point, confirmed the bearish implications of the Doji at a lifetime high. As Steve Nison's candlestick principle, the Doji candle at a lifetime high requires a close below to it for a bearish implication. The Nifty is approaching the 20DMA support of 15,576 points, just 0.73 per cent away. The recent low is at 15,666 points. This zone of support is important for the Nifty. A weekly close below this level means it is closing below the previous week's low. It is another weaker signal for the market. The RSI has already fallen below the prior minor swing low, and it looks like a double top breakdown. The daily MACD has given a fresh sell signal. Today's fall with a higher volume qualifies for a distribution day.

The recovery in the last hour is because of short covering. The long upper shadow candle and a close below the prior low demonstrate the weakness in the market. In any case, on Friday closes below the 15606- 15566 zone of support, the Nifty will give the first sign of bearishness. In that case, the recent high 15,901 points will become an intermediate top, as long as the Nifty trades below it. To be with a positive bias, in case of the Nifty moves above the prior day high of the 15769 level. The present price doesn't conducive to take fresh long positions. It is time to avoid long positions and get ready for positional shorts below the 15600-566 zone of support.

(The author is financial journalist, technical analyst and family fund manager)