MACD gives fresh sell signal
The index closed decisively below 8EMA and signaled to exit existing long positions; MACD moving below signal line
image for illustrative purpose
Dalal Street closed lower with a fresh profit booking. NSE Nifty closed at 18,159.95 with 147.70 points or 0.81 per cent decline. Only the PSU Bank index closed with a 1.41 per cent gain. The Nifty Media and PSE indices ended with 0.25 per cent and 0.04 per cent gains. The Nifty IT and the Energy indices were the top losers with 1.55 per cent and 1.31 per cent. The Realty also declined by 1.27 per cent. All the other sectoral indices were down by 0.15 per cent to 0.81 per cent. The VIX raised by 2.83 per cent. The market breadth is negative as 1,251 declines and 672 advances. About 69 stocks hit a new 52-week low, and 88 stocks traded in the lower circuit. FIIs sold Rs1,593.83 crore, and the DIIs bought Rs1,262.91 crore.
The Nifty closed at seven days low and sustained above the 18,114 support. It opened with a negative gap, and failed close above the previous hourly bar during the day. As mentioned yesterday, currently, the price structure is not conducive to fresh purchases. Now, the 20 DMA support is at 18,079, and the 10th November high of 18,114 will act as a key support zone. The index declined, but it has not given a strong bearish signal. Only a close below 18,079, we may get the confirmation of weakness. The 10th November low of 17,969 is support. The index closed decisively below the 8EMA and signaled to exit the existing long positions. The MACD has given a fresh sell signal by moving below the signal line. The RSI closed below the prior low and came down from its tight range. It is in a neutral zone now. The Elder impulse system has formed a first bearish bar after the 13th of October.
Since 1st November, the index has not moved much, and it traded between the 17,969 – 18,442 zone. On an hourly chart, it declines below the moving average ribbon, and it is a downtrend. It traded in the range after the first hour of trading. In any case, if the Nifty bounces above 18,158 today afternoon, the market may resume the uptrend again. Trade cautiously as monthly expiry is nearing.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)