MACD shows decline in momentum
RSI below 50 zone; The last 3 sessions of price actions were not convincing to be strongly bullish as Nifty formed lower high candles
image for illustrative purpose
Market Breadth is 1:1
- Trading shows 1,237 advances and 1,280 declines
- 217 stocks hit a new 52-week high
- 147 stocks traded in the upper circuit
- Either side breakout of 19,627-875 will lead to decisive directional move
The benchmark and sectoral indices were subdued in a dull trading on Monday. All the indices moved in less than a per cent. The benchmark index Nifty closed lower by 37.80 points or 0.19 per cent. The Nifty IT is gained by 0.60 per cent. The Pharma and PSU Bank indices closed with just 0.01 per cent and 0.1 per cent gains. PSE and CPSE indices also gained by 0.24 per cent. All other sector indices declined by 0.07 per cent to 0.76 per cent. The India VIX is up by 2.71 per cent to 12.14. The market breadth is 1:1 as 1,237 advances and 1,280 declines. About 217 stocks hit a new 52-week high, and 147 stocks traded in the upper circuit.
Tata Investment, HDFC Bank, and Bajaj Finance were the top trading counters today. The Nifty has formed another inside bar in a dull trading session. Volumes were almost half of the last three days. It opened on a flat note and declined sharply in the first hour. The recovery efforts were not useful to close positively. An interesting point in today’s trading is that none of the sectors or thematic indexes gained or lost by more than a per cent.
All of them were limited to less than a per cent move. It closed below the open. The last three days of price actions is not convincing to be strongly bullish as the Nifty formed lower high candles. The RSI is at 58 and declining.
The MACD histogram shows a decline in the momentum. If the RSI declines below the 50 zone, it will get a bearish confirmation. At the same time, the Nifty will decline below the 50DMA. On the downside, the immediate support is a close below 19,667-627. Even on the hourly chart, the index is taken support at the moving average ribbon for the day. But the hourly RSI and MACD have got the confirmation for their negative divergences. The Elder’s impulse system has formed a neutral bar, indicating a weakening trend. On the upside, the index must close above 19,875 for a strong bullish bias. As mentioned earlier, the 19,627-875 is the crucial zone, and either side breakout will lead to a decisive directional move.
(Chief Mentor, Indus School of Technical Analysis Financial Journalist, Technical Analyst, Trainer, Family Fund Manager)
