Hourly MACD Histogram Shows Easing Momentum

On the upside, a close above 23854 will test 24092. As stated earlier, current week’s closing is crucial. If two weeks of consolidation continue, it may test 200DMA. However, Nifty closed below prior day’s low, which is a caution for bulls

Equities traded nervously before the event risks. NSE Nifty declined by 92.95 points or 0.39 per cent, and closed at 23,603.35. Nifty Pharma up by 0.64 per cent is the top gainer. Microcap and Nifty IT indices were gained by 0.32 per cent, each. On the flip side, the Nifty Realty index is down by 2.19 per cent. The CPSE, Consumer Durable, and Consumption indices declined by over 1.50 per cent. The India VIX is up by 0.66 per cent to 14.17. The market breadth is negative as 1495 declines and 1334 advances. About 38 stocks hit a new 52-week high and 108 stocks traded in the upper circuit. Trent, SBI, HDFC Bank, Swiggy, and Bajaj Finance were the top trading counters, in terms of value.

The Nifty has formed a lower high and lower low and closed on the 200EMA support.

The 50DMA acted as a resistance for the second consecutive day. After opening on a positive note, it failed to sustain at the higher levels. The index also declined below the 38.2 per cent retracement level of the last three days’ swing. It is clearly evident that, after a 1020-point rally from the 27thJanuary low, the index is nervous about continuing the rally. Most of the sectoral indices and the market breadth are negative today. The weakness in the broader market is clearly visible. The Mid, Small and Microcap indices are declining again. The RSI declined to 52. The hourly MACD histogram shows a sharp decline in the momentum. The ADX is also declining. The positive DMI formed a pivot. This means that as long as the Nifty is trading below 23,854, there is a possibility of resuming the downtrend. In any case, a decline below 23,592 will confirm the downside. The index registered a distribution day, as the volumes were higher than the previous day, on a 0.34 decline day. On the upside, a close above 23,854 will test the 24,092. As stated earlier, the current week’s closing is crucial.

If the two weeks of consolidation continue, it may test the 200DMA. However, the Nifty closed below the prior day’s low, which is a caution for the bulls. It is better to wait for a close above the 23,853 for fresh buying. If it closes below 23,698, fresh shorts will open. Stay cautiously optimistic.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)