MACD indicates overbought condition
Nifty formed a perfect Doji candle at a new high; Normally, Doji candle at a high indicates exhaustion in trend and indecisiveness about going further highs
image for illustrative purpose
A move below 24,130 will be negative. As long as it trades positive continue with the trend. It is certainly a period of caution, and not to be complacent.Nifty scaled another new high at 24,309.15 points, with all sectors participating
Equities rallied to new highs and closed at a new high. NSE Nifty gained 162.65 points or 0.67 per cent and closed at 24,286.50 points. Bank Nifty is up by 1.77 per cent, as the Private-sector bank index gained by 1.80 per cent. The PSE, FinNifty, and CPSE grew by over 1.5 per cent. All the sectoral indices closed with decent gains. The India VIX is down by 3.19 per cent to 13.20. The market breadth is positive as 1,745 advances and 970 declines. About 215 stocks hit a new 52-week high, and 201 stocks traded in the upper circuit. HDFC Bank, Mazdock, IREDA, and ICICI Bank were the top trading counters in terms of value.
The Nifty scaled another new high at 24,309.15 points, with all sectors participating. Banks and Financials led the rally. Nifty formed a perfect Doji candle at a new high. Steve Nison’s Doji at all-time rule says it needs a close below it for a bearish reversal. A positive close will negate the Doji implications. Normally, the Doji candle at a high indicates exhaustion in the trend and indecisiveness about going further highs. The volumes were lower than the previous day. The Nifty traded in the first hour’s range. Though the index closed positively, the Bollinger bands began to contract.
This is because the index moved far away from the average. Currently, the Nifty is trading six per cent above the 50DMA and 3.10 per cent above the 20DMA. At some point in time, the indices must come closer to these averages, which is called mean reversion. Now, the RSI has reached 71.93, which is also in bought condition. The MACD line also indicates an overbought condition as it was moved very long away from the zero line. Wednesday’s gap area is a very crucial support. A move below 24,130 will be negative. As long as it trades positive continue with the trend. Watch the HDFC Bank’s move tomorrow, as it contributed a majority of the points in the last three days. It is certainly a period of caution, and not to be complacent.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
