Indicators Show Probable Swing High

Nifty made a higher high above 24,538 level, signalling the reversal and an end of the downtrend. The price pattern now looks like a perfect inverted head and shoulders, and the index closed at the neckline. The Pattern breakout target is placed above 25,800

Just before the event risk, RBI Monetary Policy, the index faced resistance at a key level. NSE Nifty gained just 16 points and closed at 24,563 points. The Nifty Realty index is the top gainer with 2.04 per cent. The FinNifty, Bank Nifty, and Midcap indices gained by over a per cent. The Smallcap also gained by 0.89 per cent. The FMCG and Auto indices declined by 0.73 per cent and 0.71 per cent, respectively. The Infra and Consumer Durables indices are down by 0.45 per cent and 0.42 per cent. The India VIX is up by 0.54 per cent to 14.45. The market breadth is positive as 1,699 advances and 1,103 declines. About 107 stocks hit a new 52-week high, and 168 stocks traded in the upper circuit. HDFC Bank, Reliance, HEG, Swan Energy, and Axis Bank are the top trading counters today in terms of value.

The Nifty made a higher high above 24,538 points, signalling the reversal and an end of the downtrend. The index is almost tested the 50DMA. The price pattern now looks like a perfect inverted head and shoulders, and the index closed at the neckline. The Pattern breakout target is placed above 25800. The index gained for the fourth successive day. It formed a long-legged, small-body candle, which indicates the probable swing high. The index will register a strong breakout if the RBI announces an encouraging monetary policy. Otherwise, it may face resistance at 50DMA and will fall to the near prior minor low. The volumes were higher in the last four days.

The indecisive candle before the event risk is common. Apart from the RBI policy, the weekly derivative expiry is also scheduled. The RSI is flat today. The MACD inched up, showing further improvement in the bullish momentum. The next two days are crucial for the directional bias. A weekly close above the 24540-600 will be a strong reversal signal. In any case, if it fails and closes below 24280, it will be negative. Stay cautiously bullish for the next two days and wait for confirmation from both sides.

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