MACD histogram shows easing momentum
Volumes were higher than the previous days, on a 0.43% decline day, and it registered the first distribution day in the last 25 trading sessions
image for illustrative purpose
The market breadth is negative after a long time, and most sector indices closed negative today. These are all signs of a weakening trend. This counter-trend consolidation is normal after a rise of 11.68% (2,200 pts)
Mkt Breadth Turns Negative
- 1,506 declines & 995 advances
- 191 stocks hit a new 52-wk high
- 128 stocks in upper circuit
- MACD histogram shows a declined momentum
- RSI declined from an extreme zone
The equity benchmark indices closed negative and formed a bearish pattern. NSE Nifty declined by 90.70 points or 0.43 per cent and closed at 20,906.40 points. Only the Nifty Media, Metal, PSU Bank, and Smallcap indices were able to close with modest gains. The Realty and Energy indices were down by 1.75 per cent and 1.31 per cent, respectively. All other sector indices declined by half a per cent on average. The India VIX is also down by 0.35 per cent. The market breadth is negative as 1506 declines and 995 advances. About 191 stocks hit a new 52-week high, and 128 stocks were traded in the upper circuit. Mankind, IREDA, and Dixon Technologies were the top trading counters today in terms of value.
Finally, the Nifty has given weaker signals after trading in a tight range for the last five days. It formed a bearish engulfing candle and closed below the previous day’s low.
The volumes were higher than the previous days, on a 0.43 per cent decline day, and it registered the first distribution day in the last 25 trading sessions. The market breadth is negative after a long time, and most sector indices closed negative today. These are all signs of a weakening trend. This counter-trend consolidation is normal after a rise of 11.68 per cent (2,200 points). The immediate support is at today’s low of 20,867 and the 8EMA of 20759. The last five days’ low is also at 20,850, which is key support.
On the upside, a close above 21,000 will resume the uptrend. After three attempts, Nifty failed to close above this psychological level. The RSI declined from an extreme zone (above 80) to 77.74. The MACD histogram shows a declined momentum. The Elder’s impulse system has formed a fourth consecutive neutral candle. As cautioned earlier, keep booking profit as the index closed below the previous day’s low. In any case, if the Nifty closes below the 20,850 points; it may test the 20,500 level, which is also a 23.6 per cent retracement level.
As the Bollinger bands expanded to the maximum level, the contraction’s probability is to test the 20DMA, currently at 20,174 points. So be vigilant on existing long positions. For fresh long positions, the risk-reward ratio is not favourable.
(The Author is Chief Mentor, Indus School of Technical Analysis Financial Journalist, Technical Analyst, Trainer, Family Fund Manager)
