MACD signals fresh bullish trend
Wednesday saw a breakout with higher volume along with broader mkt participation, which displays highest probability of forming a new lifetime high in nxt couple of days.
image for illustrative purpose
The benchmark indices inched up towards a near-all-time high with broader market participation. NSE Nifty gained by 127.40 points or 0.68 per cent and closed at 18,726.40 points. All the sectoral indices closed in the green. Nifty Metal and Realty were the top gainers with over 1.5 per cent. The FMCG, Infra, and Oil and Gas indices are up by over a percentage point. IT index recovered by 0.78 per cent. The market breadth is positive as the advance-decline ratio is at 2.05, which is the highest in recent times. About 164 stocks hit a new 52-week high, and 85 stocks traded in the upper circuit. HDFC Bank, Suzlon and ICICI Bank were the top trading counters on Wednesday in terms of value. Britannia and Tata Consumers were the top gainers in Nifty with 4.17 per cent and 3.89 per cent, respectively.
The Nifty has registered another flat base, after moving in a tight range for the last seven days. It closed only on three occasions in the past at the current level. It is just an arm’s length distance to the all-time high. There is a highest probability of forming a new lifetime high in the next two days. Wednesday’s breakout is with higher volume than the previous day and broader market participation. Apart from the better market breadth in recent times, all the sectors have participated in the rally. This makes the breakout a valid one.
Now, there is very little chance for the bears to dominate the market. During the last six days of consolidation, the index has formed indecisive and bearish candles. This is the reason many patterns failed on both sides. The index did not break the key supports and made higher minor lows. It is trading above all short and medium-term averages. The MACD has given a fresh bullish signal after a prolonged sideways. The RSI is rising in the bullish zone. The Elder impulse system has formed after a series of neutral bars. It closed at the upper Bollinger band. For now, the next visible resistance is at the previous all-time high of 18,888. Above, the targets are open to 19,455 if the rally continues. On the downside, it must close below the 18,530 for a weaker signal. Continue with bullish bias with strict trailing stop loss.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
