MACD gives fresh bearish signal

The Index closed positively, but failed to create a new high. It’s a new high close. It sharply declined in the last 30 minutes, which is a high volume. Like Monday, the high volume decline is again cautioning the bulls

Positive Market Breadth:

• 1,597 advances
• 1,111declines
• 159 stocks in upper circuit
• Daily MACD in bearish mode
• 220 stocks hit a new 52-wk high

NSE Nifty traded in a range and closed flat with high volume and negative breadth. It closed at 24,857.30 points with a 21.30-point gain. The CPSE and Consumer Durables and Energy indices are up by 1.18 per cent to 1.08 per cent. The Nifty FMCG is the top loser with a 1.11 per cent decline. All other sectoral indices declined or advanced by less than a percentage point. The broader market breadth is positive, but the Nifty breadth is negative. The advance-declines are 1,597 and 1,111, respectively. About 220 stocks hit a new 52-week high, and 159 stocks traded in the upper circuit. HDFC Bank, Tata Motors, ICICI Bank, and Axis Bank were the top trading counters on Tuesday, in terms of value.

The Nifty has formed an inside bar as it traded within the previous day’s range. The Index closed positively, but failed to create a new high. It is a new high close. It sharply declined in the last 30 minutes, which is a high volume. Like Monday, the high volume decline is again cautioning the bulls. It formed a long upper shadow and a small body candle resembling a Gravestone Doji candle or a shooting star, which is bearish when it formed at the top. The daily volumes were above average and the previous day. For now, Monday’s highs and lows of 24995.75 and 24774.60 will be the crucial levels.

In any case, if the index closes below 22774, it will be negative. The next support is at 24665, which is an 8EMA. Even though the index is at a new high, closing positively, the price pattern is like a double top, which is also bearish. On the hourly chart also, the index has formed a double-top pattern of the last two days of price action. The hourly MACD has given a fresh bearish signal. The Daily MACD has been in bearish mode since 19th July. Interestingly, the index breadth is negative. After two days of the impulsive move, the last two days of the wavering move are suspicious. Stay cool and calm for a reversal confirmation.

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