Let's wait for weekly close for directional view
As the expiry volatility and the short covering intensified in the afternoon, NSE Nifty recovered by over 100 points, but it decisively closed below the 100DMA
image for illustrative purpose
The benchmark index declined for the third consecutive day. On a weekly expiry, NSE Nifty witnesses over 184 points of volatility. Finally, it closed with 37.5 points or 0.21 per cent decline at 17858.20. All the sectoral indices gained or lost less than a per cent. The Nifty Media index, up by 0.80 per cent, is the top gainer, and the Bank Nifty is the top loser with 0.36 per cent. The Market breadth is negative as 1155 declines and 762 advances. The heavyweight Reliance declined by 2.02 per cent with the highest volume. The 33 stocks each hit 52-week highs and lows. About 63 stocks traded in the upper circuit. Reliance, PayTM and ICICI Bank were the top trading counters in terms of value.
The Nifty slipped below the four-week low. The Nifty never went above the prior week's high for the last six weeks. With breaking below 17774 and forming a new lower low means, the market is open up for a further downfall. Whether it closes below 17774 on a weekly basis is irrelevant now. We only need to consider that it ended the four-week consolidation. Technically, the Nifty has formed two bottoms and a valley in the double bottom pattern. For a bullish reversal, the valley point of 18265 has to be breached. Above this level, the index will test the 18457 and near previous high levels. To move above 18265, firstly, it must close above the prior bar high of 17945 and today's fall is an extended one of yesterday's negative breadth and small dip. The broader market breadths are deeply negative today. For the last few days, the Advance-Decline ratio has been mostly negative.
Currently, it is 0.61 per cent below the 8EMA and 0.38 per cent below the 5EMA. As the 20DMA is below the 50DMA, it is also short-term negative. The Elder impulse system has formed three consecutive bearish bars. As the expiry volatility and the short covering intensified in the afternoon, the Nifty recovered more than a hundred points. But it decisively closed below the 100DMA. On the hourly chart, the index is still below the moving average ribbon, and the MACD line is below the zero line. After breaking down 10 hours of consolidation, it sharply fell. The last two hours of recovery can be considered as counter-trend consolidation after a sharp decline. Only a move above the 17921-945 zone will be positive for the index. For now, a weekly close is important, and a close below 17774 will confirm the strong bearish bias. Let us wait for a weekly close for a directional view.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
