How long counter rally will continue?
The current swing is 14-day-old and is the longest swing in recent times; Nifty closed near the day’s high and formed a hanging man like candle
image for illustrative purpose
The Nifty tested the 19th October gap area. It closed 0.45 per cent above the 50DMA and the prior swing’s 78.6 per cent retracement level.
Key Factors
- 196 stocks hit a new 52-week high
- 145 stocks traded in the upper circuit
- RSI is near a strong bullish zone
- MACD is near the zero line
The global markets rally with the positive economic data is a sentiment positive for the domestic markets. The benchmark and all sectoral indices ended with decent gains. NSE Nifty is up by 231.05 points or 1.19 per cent. The Nifty Realty and IT indices were the top gainers with 2.95 per cent and 2.59 per cent, respectively. The Auto, Metal, Energy, and Infra indices gained by over one per cent. All other sector indices are up by 0.12 per cent to 0.96 per cent. The VIX is down by 0.47 per cent. The Market breadth is positive as 1,536 stocks advanced, and 926 stocks declined. About 196 stocks hit a new 52-week high, and 145 stocks traded in the upper circuit. The newly listed stock Protean is up by 20 per cent.
The Nifty tested the 19th October gap area. It closed 0.45 per cent above the 50DMA and the prior swing’s 78.6 per cent retracement level. The current swing is 14-day-old and is the longest swing in recent times. It closed near the day’s high and formed a Hanging Man like candle. The Nifty also closed above the Anchored VWAP resistance. Now, the question is how long this counter rally will continue. The prior swing high of 19,849.75 is the visible toughest resistance. The RSI is near a strong bullish zone.
The MACD is near the zero line. The 61.8 per cent retracement level of the prior downtrend trend from all time is at 19,693 points. Expect that the 19,693-850 zone will be crucial for the index to reverse the trend on the upside. On the downside, today’s gap area is an important support. The 50DMA of 19,580 is also a crucial support. If the Nifty closes below 19,580 and fills the gap area by testing 19494, it will be negative and will resume the downtrend. Until then, we can’t be bearish.
(Chief Mentor, Indus School of Technical Analysis Financial Journalist, Technical Analyst, Trainer, Family Fund Manager)
