Hourly MACD about to flag bearish signal

The index has repeated the previous week’s price action, with over 2%. Interestingly, the volumes were lower than in previous weeks. For the last four weeks, the volume has been declining. The daily volumes also declined. As the Bollinger bands expanded, the index closed just on the upper band

Another volatile and impulsive week ended with over two per cent gains. NSE Nifty closed with a flat to negative bias, with a decline of just 10.55 per cent and closed at 22,957.10 points. The PSE and Media indices gained by over one per cent. Oil and Gas indices gained by over 0.50 per cent. The Nifty FMCG is the top loser at 0.80 per cent. Realty, IT and Pharma indices are down by over half a per cent. All other sector indices gained or lost by less than half a per cent. The market breadth was negative as 1,526 declines and 1,110 advances. About 129 stocks hit a new 52-week high and 90 stocks traded in the upper circuit. HAL, IDEA, CochinShip, and Adani Ports were top trading counters on Friday in terms of value.

Technically, Nifty has formed a Shooting Star candle after hitting a new lifetime high at 23,026.40 points. The index has repeated the previous week’s price action, with over two per cent gains. Interestingly, the volumes were lower than in previous weeks. For the last four weeks, the volume has been declining. The daily volumes were also declined. As the Bollinger bands expanded, the index closed just on the upper band. The Shooting Star candle hints at a counter-trend consolidation. The Nifty has traded in a tight range of just 118 points range. This kind of narrow move is common after an impulsive move.

As we enter the last phase of elections, we will see more consolidation before the results. The RSI is in the strong bullish zone, but flattened because of sideways movement. The MACD shows strong bullish momentum. The hourly MACD is about to give a bearish signal. Most of the long positions were exited on Friday. As the index formed a Shooting Star candle, stay cautious on long positions.

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