Inside bar breakout signals upside directional bias
Nifty bounced back and closed above Friday’s high with a higher volume than previous day; It also formed bullish candle indicating more positivity
image for illustrative purpose
The equities bounced back after a three-day retracement and closed near the recent high. NSE Nifty gained by 114.65 points or 0.62 per cent and settled at 18,723.15pts. Only the Nifty Auto index is a loser on Tuesday with 0.11 per cent. The Realty index is the top gainer with 3.01 per cent. The Nifty Media, FMCG, Metal, Pharma, and Midcap-100 indices gained over one per cent. All other sectoral indices gained 0.30 per cent to 0.95 per cent. The India VIX again declined by 1.27 per cent and closed at 11.11 level. The Advance-Decline ratio is improved to 1.56. About 141 stocks hit a new 52-week high, and 77 stocks traded in the upper circuit. HDFC Bank, Kotak Bank, and Axis Bank were the top trading counters on Tuesday in terms of value.
Nifty bounced back and closed above Friday’s high. The inside bar breakout occurred on the upside, with a higher volume than the previous day. The intraday dip is also used as a buying opportunity. Tuesday’s inside bar breakout gives a directional bias on the upside. As we suspected, Monday’s higher low candle and closing above the 5EMA support have given early signs of a possible upside move. The index has formed the most bullish candle, as it formed an open low and close is almost high. This strong bullish candle indicates more positivity. Bears once again failed to get the confirmation for daily bearish candles. The RSI has taken support at the 60 and bounced in the strong bullish zone. The MACD line is still below the signal line. The histogram shows a decline in bearish momentum.
Interestingly, the broader market participation in the rally hints at inherent strength in the trend. The market breadth also improved on Tuesday. A reasonable correction for two days repeated the price action in the recent base and closed above the base breakout level. Now, a close above 18,778pts will be positive and will open more possibilities for a new lifetime high. As stated earlier, only a close below the 20DMA of 18,475pts will be negative. Now, stay with the trend, and be selective on trades.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
